Traditionally, many employees took advantage of 401(k) retirement plans from their employers as, for some, employers would contribute to these 401(k) plans. While many have used these type of retirement accounts as a way to save money for when they are older, Roth IRA accounts have become more popular for some as they do have benefits which may outweigh other forms of retirement savings.
While there are both traditional 401(k) plans and Roth 401(k)s, as well as traditional IRAs and Roth IRA accounts, many investors have turned to Roth IRAs as a way to begin saving for their future simply because they can withdraw earnings from this type of retirement account tax-free later in life.
Some individuals who have seen drastic reductions in their 401(k) or who may have had to borrow money from their 401(k) due to financial difficulties have may also benefit from having Roth IRA account set in place as a way to secure themselves and spread their investments out over a wider range of retirement options. Understandably, Individual Retirement Accounts, be they a Roth account or traditional account, do have certain perks that may be more attractive to certain investors than others, but for many, new conversion rules which allow investors to roll a traditional IRA into a Roth account have many considering a Roth retirement savings plan.
Also, some workers are turning to Roth IRA investments simply because there is no required withdrawals once the investor reaches a certain age, which can be helpful again for those in certain situations. However, it’s understandable that some individuals are sticking to 401(k) plans if they have a stable job and their employer, perhaps, is making contributions to this retirement plan as well.
However, the increases in popularity for Roth IRA accounts have led many to begin considering these types of investments either as their main plan for retirement, or as a way to invest alongside a 401(k) plan. Understandably, any of these retirement plans are no guarantee, but some investors have chosen Roth IRA accounts simply because, at the present time, they are willing to pay taxes on their income in the hopes of earning a sizable amount for retirement and being able to withdraw the funds tax-free.