Who will the Winner be in the 401k vs. IRA Battle?
There are a lot of people out there who do not know what to do with their money following the recent economic troubles. People lost a great deal of money when the economy went bottoms up and in turn this has now made them afraid to commit to investing. To ensure that you make no mistakes on your choice of investment for your retirement I am going to do a comparison between the main choices that you have. Here is my 401K vs. IRA vs. Physical Gold comparison.
We are first going to have a look into the 401k and the benefits of investing with it.
Basically a 401K is your standard retirement plan which you will be given a choice through your work of investing some of your wages in each month. One of the leading advantages of investing money with a 401k is the fact that you are not required to pay a single penny of income tax until the day comes where you decide you will take your money out. Often if a person with this type of retirement fund tries to withdraw any of their savings prematurely then they will face heavy takes costing them a lot of money if they are not 100% sure what they want out of a retirement fund.
When your retirement savings are tied up in a 401K then you can often feel very uncomfortable and vulnerable because you have no control over your money whatsoever. In this day and age there are an increasing number of people who are getting to their retirement age who thought their money was safer than it is turning out to be in their 401K's. In 2008 when the economy first took its major dive people quickly started to realize that their money was not as safe as they had first thought it would be. All though the 401K does have some benefits I would not recommend it if you are looking for long term investments.
401k vs. IRA: Time for the IRA!
IRA funds usually can be placed into 2 different common types that people can open for retirement. There are so many options available out there that this first type of IRA that we are going to look at in my opinion is easily passed by and it is called the traditional IRA, it does carry some advantages but definitely more disadvantages. I feel that its main problem is that you can only start getting your money distributed when you hit a certain age. Basically the rule here states that after you reach 70 you have got to start withdrawing your money weather you like it or not so come 70 and a half you have to make that first withdrawal. One of the main down falls of this type of IRA is that you can really run into some troubles with the IRS if you fail to withdraw your savings in time. This fact makes it a bad option for a retirement investor.
When we look further into the Roth IRA we can quickly see that it also carries problems of its own, such as it is not tax-deductible. One of the other points that I have discovered regarding the Roth IRA is that you have to pay your full tax amount in one lump for each year because it does not reduce your adjusted gross income. My conclusion is that the Roth IRA is looking to be the best and safest investment option that is available in today's market. The only other thing I would suggest is looking into one that allows you to add physical Gold.
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