GREENSBORO, N.C. — What's your plan for retirement? The answer usually consists of a Roth IRA, a traditional IRA, and a 401K.
101 OF THE PLANS
A 401K is a retirement plan offered by an employer. Often, there is a matching of funds.
A traditional IRA is a retirement plan you do on your own.
A Roth IRS is a retirement plan many employers are now offering along with a 401k, but you can also get them on your own.
Is it okay to put all your money into just one kind of plan?
Experts say you need to diversify and have a Roth with a regular IRA or a 401k.
"The 401k, we can put more money in those accounts, but it's tax-deferred which means it's not tax-free, you're eventually going to pay taxes on that money. At some point, we're going to have to pay taxes on all that money within 10 years. That's painful to think that all that hard-earned money will be taxed like that when you take it out," said Scott Braddock of Scott Braddock Financial.
The Roth works uniquely different.
"Your money is going to grow tax-free and you can take out it tax-free and there is no requirement to take it out at a certain time," said Braddock.
Maybe your plan for retirement needs a little tweaking. It's worth asking your HR benefits department about it or a financial planner. Many financial planners will do a consult for free or a small fee.