Is a Roth 401(k) Better Than a Roth IRA?

[Music] mike starts off this hour in dallas texas hey mike how are you i am doing good thanks for taking my call sure what's up so my question is um my wife and i just finished baby step three and so in looking into my retirement account at work i have a 401k and i discovered that i can either do it as pre-tax or a roth and so i was wanting to find out is there a difference between a roth 401k versus the roth ira and which is you know the better should i do both or just one that's a good question is there a max uh i'm not a max a match with your roth 401k uh yes my work matches six percent yeah so what we teach here is it's always gonna be match roth than traditional so i'm going with your matched roth 401k before a roth ira but that's because of the match because of the roth they're both roths meaning they both will grow without taxes on the growth so a roth ira grows exactly like a roth 401k obviously the 401k has a handful of options and the ira has 8 000 mutual funds you can choose from that would be your main difference but if your 401 k has good strong mutual fund options uh you certainly do the match first what anthony was saying but then beyond that if you want to say do i continue there in the roth 401k unmatched portion or do i do a personal roth it won't matter if you picked exactly the same mutual fund you'd have exactly the same results so if you've got good funds in your 401k which most do these days uh then you're fine to just use your 401k to get to your 15 in baby step four okay that makes sense to you yes yeah and it's got some it's with one of the big firms and it's got some pretty good um pretty good options in there for me yeah it makes it real simple to not have to do the personal one but now what's your household income uh right around 115 a year okay so you can get to uh you can get to 15 of your household income within your 401k yes yeah and without maxing it out or anything so you don't have to do the personal and as long as you got good options i would just do that from a simplicity standpoint easy just makes it real easy you don't think about it it's autopilot's coming out your check you know life goes on good question

Channel: Ramsey Everyday Millionaires

Views: 152,157

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Id: 6JzKNdDCmH8

Length: 2min 47sec (167 seconds)

Published: Fri Jul 23 2021