ROTH 401k VS ROTH IRA Which one is Best for Retirement? Tax and Legal Tip - YouTube

Hi, Mark, Kohler here with another tax and legal tip let's talk about comparing the ROTH 401k with the ROTH IRA

[I] get a lot of phone calls with clients asking Mark. Which one's best for me now. This is a complex topic

Let's see what we could do and break down the basics, okay?

[let's] go to the whiteboard and put them in two different columns. See if that will help make more sense of it

Let's start with the roth IRa first

More people are familiar with the Ira or roth, Ira

But around a little longer and then we'll put the roth 401k over on this side now

There's pros and cons to [both], but let's start with the roth, Ira

Maybe we'll contrast what's good and bad because again everybody's a little different, but you can only put fifty five hundred

into a roth Ira or

[sixty-five] hundred it would catch up if you're over age 50 now. There's also some income limitations

So if you make too much money, you can't even do this which is probably one of the cons, right?

limitations

you cannot borrow against your

Ira so that's another problem when you start comparing them with the [roth] 401k?

But the roth ira is simple. It's easy, and it's cheap to set up so that's easy and affordable

So you've got these different options, and if some of you want to get into a roth ira watch my video on the roth

Conversion because there's no income limits on a roth conversion

but when I have a client looking to put away a lot more money and even

Self-Direct and get a little more creative with some lending we might want to go to the roth 401k all right now

Let's compare the roth 401k and go over here now the first benefit

We like is you can put away a lot more money eighteen thousand dollars

Twenty four thousand that's a six thousand dollar makeup of you're over age 50

So you can see here kind of a big deal

Now the next benefit is there's no

limitations here when it comes to your income level you make a million dollars and still put money in a roth 401k, so

Like that no limitations on income also

[with] a 401 k you can borrow against it borrowing provisions are pretty cool

We I love the borrowing provisions if you want to suck some money out of the 401k and use for personal reasons

Now the con here in this situation is in order to take advantage of this you've gotta have a small business

you got to have some small business income, so

I typically see our clients with s corporations with ordinary income really funding the roth 401k

The other con is you've got your set-up cost. We charge around twelve hundred bucks

You're going to see that or more out there if you have multiple employees it could get a little more expensive

But [I] would say I'd budget around twelve hundred dollars per set up

And we charge around four hundred dollars a year and you get to be your own trustee and maintain the checkbook

No

[stockbrokers] are taking a percentage of this this is for you to self-direct your own 401k

Which I'd like to summarize with that with both of these plans you can self direct

And you can invest in what you know best watch them right other videos on this strategy

But with A [401k] you can borrow inside your 401k to do

Investments with no you [DFI] that's unrelated debt financed income another deep concept

But you [haveyou] [dFI] when you borrow money inside a roth ira [and] yourself directly bottom line

This is a complex topic as you can see and something you should debate with your accountant or financial advisor

We open to self-directed don't let an advisor tell you you can't do this

It's usually that they can't do it

But you can look at your options even if you have employees as to what you can do with [the] roth 401k again

Talk to your advisor big topic

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