Roth IRA Retirement Investing–Are Roth Accounts A Good Supplement To 401(k) Retirement Plans?

Individuals who are seeking out retirement investing opportunities often turn to Roth IRAs due to tax advantages which may be used later in life, but many men and women who have a 401(k) retirement plan often wonder whether a Roth IRA should be used as a supplement to their 401(k) retirement plan. While this obviously comes down to a decision on the part of an investor, there are many proponents of investing in a Roth IRA as a way to supplement another retirement account, like a 401(k) plan.

Typically, investors who are planning for their retirement may feel that investing in two types of retirement accounts may be excessive, but there are those who feel that supplementing a 401(k) with a Roth account can have benefits as earnings on a Roth IRA can be withdrawn tax-free and, this can not only offer an investor a higher amount when they retire, but earnings from a Roth IRA are sometimes used to offset taxes which are paid when an investor begins to withdraw funds from a 401(k).

While, it goes without saying that each investor’s goals for retirement will differ, those who have chosen to use Roth IRAs simply feel that since money they earn can be withdrawn tax-free will they will be in a more profitable situation than with other retirement accounts where taxes will be levied on withdrawals at a certain age. It’s true though, there are some investors who are using traditional IRAs or other investment strategies which allow them the opportunity to write off contributions to these types of accounts. Usually, this is done because men and women will be in a lower tax bracket when they retire and will not have to pay excessive amounts of taxes related to their retirement investments, but arguments for diversifying retirement accounts may be beneficial in this area as well.

Despite the fact that taxes must be paid on traditional IRAs or 401(k)s, investors can, again, offset these losses from taxes by having additional funds from a retirement account like a Roth IRA. However, when it comes down to investing and diversifying one’s retirement accounts, it is strictly up to an investor as to which route will be the best. While there are many men and women who simply use a 401(k) or a Individual Retirement Account, there are those who feel that there are more benefits to be had if options from multiple retirement accounts are available later in life.