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Money and Finances
Reply to "24 year old making 70k—Roth 401k or Traditional"
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[quote=Anonymous][quote=Anonymous]^^^ and if you are helping, I think directing to ROTH 401k locks the money in stronger than IRA (where contributions can be withdrawn) so that’s probably where I’d subsidize my own kid (even though I trust them)[/quote] Not a financial advisor but I think it works like this. Since the money added is pre-tax, it can be used (like for a downpayment after a span of time, maybe 5 years?) but the money earned can't be (until age 59.5). I learned this while looking at "catch-up" contributions. I am at the highest tax bracket and can catch up but only via Roth and I was trying to determine if that was a good idea for me. Yes, it is b/c the earnings will go tax free. If I just save it in a brokerage, the earnings will not grow tax free. But I can take the principal whenever I want (like if I retire early).[/quote]
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