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    • Tax Preparation
    • Home Loans
    • Personal Finance Coaching
  • About Us
    • Meet Chad
    • Meet Emilie
    • Chad's Story
  • Client Resources
    • Tax Resources
    • Home Loan Resources
    • Financial Coaching Resources
  • E-News
  • Client Reviews
  • Contact Us
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Contribute To A 401k Or Roth IRA

Making Finances Simple. Changing Lives.
Employer retirement plans (401k’s, 403b’s, 457b’s) are a great way to invest; so are Roth IRA’s. It’s almost always advisable that you contribute an amount at least up to your company match.

So if your employer matches 50% of your total contributions, for up to 6% of your salary, it’s usually a good idea to at least contribute an amount to your 401k that equals that 6%-of-salary figure.

After that, tax planning comes in to play. 401k contributions reduce taxable income during the contribution year and are fully taxable upon withdrawal.

While Roth IRA’s provide their tax benefit at distribution, with those distributions being totally tax free (as long as you follow applicable rules).

The general rule of thumb says that if your future tax rate will be lower, it’s likely more efficient to use 401k’s versus Roth IRA’s (since you’d save taxes at your higher current rate, then withdraw later at your lower tax rate).

If your future tax rate will likely be the same or higher, it’s generally advisable to contribute to a Roth IRA so your withdrawals are tax-free later, rather than taking the tax benefit now.

NOTE: there are contribution/income limits that come into play as well.

Feel free to contact us with any questions...we’re here to help!


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​​© 2023 Peshke Financial Inc., all rights reserved. NMLS #2244878. "Making Finances Simple. Changing Lives." is a pending trademark with USPTO. Material contained in this website is for informational purposes only and is not meant to be construed as direct financial advice for your specific situation. It is recommended that you consult with your own advisors for any personalized financial guidance. Since we’re not licensed attorneys, we cannot provide legal advice. As such, any info contained in this website should not be construed as direct legal advice. Individual Licensure (see profiles) - click here. Send Docs Securely - click here.