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401k after tax deductions same as Roth IRA?
I have a traditional 401k through my job. I started taking out pretax money including my after tax money in my 401k. Is taking out pretax dollars from your 401K the same as a ROTH IRA? I live in Philadelphia, if that helps
4 Answers
- rainfingersLv 41 decade agoFavorite Answer
It sounds like you're talking about taking distributions from your retirement accounts--taking money out after you've reached retirement age. 401K distributions (and traditional IRA distributions) are taxable income, since you didn't pay taxes on the money when you put it in. Roth IRA distributions are not taxable, since you already paid tax on that money before you put it in.
If you're talking about putting money into your accounts, remember that the 401K is pre-tax and the Roth is after tax. (Separate yearly limits apply to each.) Don't put the wrong kind of money in either account, it will cause tax headaches later.
- Anonymous1 decade ago
No. It is not the same. All money earned by a Roth IRA is tax free. That includes money put into a Roth IRA for which taxes were already paid. All money taken from a 401k is taxable.
- 1 decade ago
No. Pretax dollars for 401k now means not paying taxes until your pull your money out. Roth IRA means pay the tax now, and never pay tax on that money again.
- Anonymous1 decade ago
all should be tax free.