Ed Slott

speaker
299 appearances 3 recordings 1 series first heard Jan 2018 last heard Apr 2022

Ed Slott’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Little-Known Tactic Lets Retirement Savings Grow Tax-Free · 16 Jul 2021 podcast
Great to be with you.
Thanks.
A Roth IRA is your own personal retirement account.
That's why they call it individual retirement account.
And you also can have a traditional IRA.
Each of those are versions of your own personal retirement accounts.
The difference is tax wise.
With a traditional IRA, you can get a tax deduction for your contributions, but then when you distribute in retirement, the funds you take out will generally be taxable.
As opposed to a Roth IRA, where you do not receive a tax deduction, but the big benefit on the back end, if you qualify, you hold the account for five years and you're 59 1⁄2 years old,
for the intended purpose to use in retirement, then all distributions in retirement should be tax-free to you out of your Roth IRA.
So that's the big tax difference benefit of the Roth IRA.
A 401k is not your own personal retirement account.
It's actually maintained by a company you may work for,
that sponsors a 401k, a retirement plan for all the employees, which you may be able to partake in.
But it's housed, it's maintained by the company.
So let's say you put in, I don't know, another $30,000 in the after-tax account, and the company allows in-service withdrawals, which means you're allowed to take the money out of the after-tax account at any age, even though you're still working there.
You can pull, let's say you have 30,000 extra you put in the after-tax account.
If they allow in-service withdrawals, you pull that 30,000 out and move it, roll it over to your own Roth IRA.
And that doesn't preclude you
from still contributing to your own personal Roth IRA if you qualify.
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