Posted By JoeBody on February 24, 2012
Who will the Winner be in the 401k vs IRA Battle?
With the economy in the state that it is in people nowadays do not know what they are going to do to keep their money safe. I think the main reason that people fear investing their money so much is because they lost so much money a few years ago at the start of the economic crisis that they are affraid they will get burnt again. Here I am going to go into great detail and give you a comparison between 401K?s, IRA?s and physical gold investing. I believe that it is very important to know the ins and outs of the investing game before you decide to part with any of your money.
So then at the start of the 401k vs IRA vs Comparison I would like to start out with the 401K.
If you are already investing money into your works pension fund then that is a 401K. You will be given a choice of the percentage you wish to invest each month. One of the leading advantages of investing money with a 401k is the fact that you are not required to pay a single penny of income tax until the day comes where you decide you will take your money out. Often if a person with this type of retirement fund tries to withdraw any of their savings premeturely then they will face heavy takes costing them a lot of money if they are not 100% sure what they want out of a retirement fund.
When your retirement savings are tied up in a 401K then you can often feel very uncomfotable and vunerable because you have no control over your money whatsoever. When people started investing money into their 401K?s a lot of them thought that their money was going to be looked after a lot better than it has been. In 2008 when the economy first took its major dive people quickly started to realize that their money was not as safe as they had first thought it would be. Allthough the 401K does have some benefits I would not reccommend it if you are looking for long term investments.
401k vs IRA: Now lets have a look at IRA?s!
When you look into opening up IRA fund?s for your retirement you will often be looking into two common types. As with anything there are plus sides and negative sides and the first type of IRA that we are going to look at called the traditional IRA is certainly no exception and I feel its disadvantages far outweigh its advantages. I feel that its main problem is that you can only start getting your money distributed when you hit a certain age. Even if you do not want to touch the money you have saved when you are 70 in this type of IRA you have no choice but to start withdrawing it. If you do not take out your money when you are supposed to then the IRS can come down on you and actually take half of the money you were supposed to withdraw. In my opinion if you are looking for a safe investment, this is not it.
The Roth IRA is not tax de-ductible so it also has problems of its own. There is no way of reducing your adjusted gross income with the Roth IRA which ends up meaning that you have to pay off your tax bill in one lump sum every year. My conclusion is that the Roth IRA is looking to be the best and safest investment option that is available in todays market. I like the flexibility with the Roth IRA and I would recommend looking into them but even more so if you can invest in physical gold and put that in there.
For more 401K vs IRA information check out Gold Bar Member.
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Source: http://www.siedem.twoj-internet.com/2012/02/24/ira-vs-401k-investing-help/
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