To Roth or Not to Roth?

Summary: In this episode, we answer another listener question about whether he should invest in a Traditional 401k, a Roth 401k, or both.<br> If you’re employed, chances are your employer offers a 401k. Normally, this would be a Traditional 401k, but check with HR to see if they offer both a Traditional and a Roth.<br> 401ks allow you to invest your pre-taxed income, and sometimes employers will match up to a certain percent. If they do, take it — it’s free money. However, Traditional 401ks have a yearly limit as to what you can invest. Therefore, some employers will also offer a Roth 401k which allows you to invest after-taxed money from your check — there is also a limit too.<br> If you can afford to max out both, go for it. If not, go with a Traditional 401k, and anything over the limit to which you can invest, through that in the Roth — hopefully your employer will do some matching there too.<br> Show Notes<br> <a href="http://en.wikipedia.org/wiki/Health_savings_account" target="_blank" rel="noopener">Health Savings Account (HSA)</a> — This is a savings account you can open to use for health-related costs.<br>