The theme this week on the One Minute Retirement Tip podcast is How to get the most out of your 401k plan. You may be saving and getting the match, but are you fully taking advantage of all the amazing benefits that your 401k has to offer you? 

Today, I’m talking about the Roth 401k. The vast majority of 401k plans offer a Roth option these days, but most employees are still missing out on the powerful tax-free growth that the Roth 401k option provides. 

Many working Americans who are in their 50s and 60s ignore the Roth option in the 401k at their own peril. Diving deep into the benefits of the Roth is beyond the scope and the time allotted in today’s episode, so let me just say this: 

The benefit of contributing to your Roth 401k lies in the taxes. Every dollar in the Roth is never taxed again, so you could let money grow tax free for the rest of your life or take the money out as income in retirement without ever paying taxes on those withdrawals or taxes on the growth. 

Tax-free growth and tax-free withdrawals are a beautiful thing! 

The tradeoff though is that you don’t get a tax deduction on your contributions to a Roth, but you do get a tax break in the current year if you make contributions to a traditional 401k.

So take the time to find out if a Roth option is available in your plan and consider if a Roth option is right for you. I’m a big believer in having retirement funds in Roth, so if you want to learn more, I encourage you to search through the archives of the One Minute Retirement Tip, where I’ve devoted weeks and weeks to the Roth, covering everything from the Mega Backdoor Roth to what you need to know about investing in a Roth after age 50. 

That’s it for today, Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance