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SaltPork · 03-21-2006, 09:34 PM

A traditional IRA is tax deferred meaning you pay taxes on the money you take out after you turn 65. A Roth IRA is a post tax contribution, meaning you've paid the taxes up front and money taken out at age 65 is tax free.

You can contirbute to IRA's, Roth's, and 401K's all at the same time though. The limits imposed are on the individual accounts not on the collection of them. I personally have a 401K and 3 Roth IRA's. I contribute fully to two fo the Roth's the other I jsut let sit and make money.

When you leave your current job, or if, you can choose to leave your money in the company 401k unless that company goes out of business or they close the 401K. In that case you should get a notice. If you choose to move your 401k money you have a few options, but staying with the IRA thing, you can roll the 401 into a traditional IRA and pay no taxes, or you can roll it into a Roth and pay whatever taxes are owed. Typically with a Roth rollover you have three years to pay any taxes owed against the rollover, but it's usually easier to jsut get it over with unless the taxes owed create a hardship.

03-21-2006, 09:34 PM	#3 (permalink)
SaltPork Everything's better with bacon Location: In your local grocer's freezer.	A traditional IRA is tax deferred meaning you pay taxes on the money you take out after you turn 65. A Roth IRA is a post tax contribution, meaning you've paid the taxes up front and money taken out at age 65 is tax free. You can contirbute to IRA's, Roth's, and 401K's all at the same time though. The limits imposed are on the individual accounts not on the collection of them. I personally have a 401K and 3 Roth IRA's. I contribute fully to two fo the Roth's the other I jsut let sit and make money. When you leave your current job, or if, you can choose to leave your money in the company 401k unless that company goes out of business or they close the 401K. In that case you should get a notice. If you choose to move your 401k money you have a few options, but staying with the IRA thing, you can roll the 401 into a traditional IRA and pay no taxes, or you can roll it into a Roth and pay whatever taxes are owed. Typically with a Roth rollover you have three years to pay any taxes owed against the rollover, but it's usually easier to jsut get it over with unless the taxes owed create a hardship. __________________ It was like that when I got here....I swear.