Video transcript:
Did you know there are three ways to contribute to your 401k, 403b or 457B retirement plan? through a pretax account, a Roth account, or a combination of the two. The main difference is when you pay taxes. With a pretax account, your contributions go into your account before you pay taxes. That lowers your current income tax bill and can help you save more money.
Then when you're ready to withdraw the money, usually during retirement, you'll pay taxes on both your contributions and any earnings you've accumulated, potentially at a lower tax rate. With the Roth account, you pay taxes before you contribute to your account. Your money can grow tax-free, and you can withdraw it tax free in retirement. A Roth account may be a good choice for you if you're just starting out and are in a low tax bracket so your money will have lots of time to grow tax free.
You're highly compensated now and don't mind paying taxes, so you can enjoy tax-free withdrawals when you retire, you expect to be in a higher tax bracket when you retire, or you want to leave tax free money to your heirs. Either way, contributing to a retirement plan can help you enjoy a more comfortable retirement.
Visit Equitable.com/retirement to learn more.
