How do my withdrawals get taxed in retirement?
- What's an individual 401(k) plan?
- When are individual 401(k)s a good deal?
- Who can contribute to one?
- When can I get access to the money?
- What if I need the money before retirement?
- How should I invest the money?
- How do my withdrawals get taxed in retirement?
- Does an individual 401(k) plan make sense for me?
- Who can help me set up and administer a plan?
If you go with the regular individual 401(k) and put away money on a pretax basis, your money grows tax-deferred - but it is taxed as income when you withdraw it. If you choose to invest in an individual Roth 401(k), you put in after-tax dollars now but your money grows tax-free, so that you pay no taxes upon withdrawal.
The Roth version might make sense if you expect your tax bracket to rise sharply by the time you are making withdrawals. But the choice between a traditional 401(k) and a Roth 401(k) can be tricky, so get help if you need it.
