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The Roth 401(k)
You may be familiar with a traditional 401(k) retirement plan, but today Bruce Hosler of Hosler Wealth Management will explain how a Roth 401(k) works, how it's different, and the benefits associated with it.
In a traditional 401(k), the contributed funds are tax-deferred. Participants don't pay taxes on the way in; that money doesn't count toward their annual taxable income. Many clients love this.
However, you do have to pay taxes on the way out. That can be in the form of required minimum distributions or RMD's. Those earnings count toward your taxable income in retirement, and they could push you over the threshold to have your social security benefits taxed at a higher rate! Bruce breaks down those numbers.
Conversely, with a Roth 401(k), taxes are paid at the time of contribution, the funds grow tax free, and they don't count as taxable income when withdrawn. So, they themselves can never cause your social security benefits to become taxable. And the annual contribution limits are the same as a traditional 401(k)!
Further, the SECURE Act 2.0, passed in December of 2022, allows for matching contributions to Roth 401(k)s, and they are no longer subject to required minimum distributions.
Bruce explains why he's a fan of the Roth 401(k), including the ability to save money tax free, the ability to help avoid taxes on social security benefits, flexibility in retirement, and a "bastion of safety" against potentially higher taxes.
For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/
Or call them in their Prescott office at (928) 778-7666 or their Scottsdale office at (480) 994-7342.
For more podcast episodes, visit our podcast website at https://hoslerwm.com/protectingwealthpodcast/
Limitation of Liability Disclosures: https://www.hoslerwm.com/disclosures/#socialmedia
Copyright © 2022-2025 Hosler Wealth Management LLC, All Rights Reserved. #ProtectingWealthPodcast #ProtectingandPreservingWealthPodcast #HoslerWealthManagement #BruceHosler
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By Bruce HoslerYou may be familiar with a traditional 401(k) retirement plan, but today Bruce Hosler of Hosler Wealth Management will explain how a Roth 401(k) works, how it's different, and the benefits associated with it.
In a traditional 401(k), the contributed funds are tax-deferred. Participants don't pay taxes on the way in; that money doesn't count toward their annual taxable income. Many clients love this.
However, you do have to pay taxes on the way out. That can be in the form of required minimum distributions or RMD's. Those earnings count toward your taxable income in retirement, and they could push you over the threshold to have your social security benefits taxed at a higher rate! Bruce breaks down those numbers.
Conversely, with a Roth 401(k), taxes are paid at the time of contribution, the funds grow tax free, and they don't count as taxable income when withdrawn. So, they themselves can never cause your social security benefits to become taxable. And the annual contribution limits are the same as a traditional 401(k)!
Further, the SECURE Act 2.0, passed in December of 2022, allows for matching contributions to Roth 401(k)s, and they are no longer subject to required minimum distributions.
Bruce explains why he's a fan of the Roth 401(k), including the ability to save money tax free, the ability to help avoid taxes on social security benefits, flexibility in retirement, and a "bastion of safety" against potentially higher taxes.
For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/
Or call them in their Prescott office at (928) 778-7666 or their Scottsdale office at (480) 994-7342.
For more podcast episodes, visit our podcast website at https://hoslerwm.com/protectingwealthpodcast/
Limitation of Liability Disclosures: https://www.hoslerwm.com/disclosures/#socialmedia
Copyright © 2022-2025 Hosler Wealth Management LLC, All Rights Reserved. #ProtectingWealthPodcast #ProtectingandPreservingWealthPodcast #HoslerWealthManagement #BruceHosler