64 • MARTIN H. RUBY
down the road makes a difference when you are considering how you’re going to save. Think back to the difference in the tax accumulation of tradi- tional retirement accounts and their Roth counterparts:
401(k)
Roth 401(k)
Taxes Paid
Deferred
Upfront
Growth
Many options, typi- cally mutual funds; account value can go down 10% tax penalty on all funds withdrawn before 59 ½ Yes, at designated age . ¹³
Many options, typically mutual funds; account value can go down 10% tax penalty on earn- ings only if funds with- drawn before 59 ½
Penalties
Mandatory withdraw- als Contribu- tion limits Expenses/ fees
No
Yes
Yes
1–2% annually
1–2% annually
I can’t tell you which approach is right for you. You’re reading a book. I don’t know you. I don’t know your needs, your goals for the future, or your individual situation. But I can tell you what I recommend to two of the most im- portant people in my life: my daughters. My daughters are currently forty (Rebecca — you met her be- fore) and thirty-seven (Sara). Both have found their way into good careers in marketing. I’ve been blessed with four grandchildren. Life is good. Several years ago, I noticed something alarming. Both of my children were making the same mistakes I made. Both were saving ¹³ IRS. 2023. "Retirement Plan and IRA Required Minimum Distributions FAQs" https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum- distributions-faqs
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