401(k) vs Roth IRA: Have You Been Asking the Wrong Question? - 33

Action Item: Share today's episode with a coworker the next time they ask you "should I have a 401k or a Roth IRA?" Help them understand that those are actually two different questions, and send them this episode so they can walk away with the same clarity you have now.SummaryIn this episode I break down one of the most common questions I get from young adults just getting started with retirement savings. Should you have a 401k or a Roth IRA? The truth is that question is actually asking two separate things at once, and once you understand that, everything clicks. I walk through all the major retirement account types including the 401k, TSP, 457b, 403b, IRA, and brokerage account so you know which ones apply to your situation. Then I explain the difference between Roth and traditional tax treatment using a seed and harvest analogy that makes the whole thing finally make sense. I also introduce you to Lisa, a 26 year old accountant who spent a year and a half thinking a 401k and a Roth IRA were the same thing, and walk through exactly how she got both accounts working for her at the same time.Resources & Links MentionedFPYA Retirement Planning Guide: https://fp4ya.com/guide/retirementWhat Is Coast FI and How Do You Calculate It (YouTube): https://youtu.be/UcVyjqf5MV0Charles Schwab: Common Types of Retirement Plans: https://www.schwab.com/learn/story/types-of-retirement-plansIRS: Types of Retirement Plans: https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plansNerdWallet: Roth 401k vs 401k: https://www.nerdwallet.com/retirement/learn/roth-401k-vs-401kEmpower: After Tax vs Roth 401k: https://www.empower.com/the-currency/work/after-tax-vs-roth-401kTimestamps[00:01:42] Why Coast FI matters when you are young and just getting started[00:04:12] Breaking down every major retirement account type and who they are for[00:10:30] The IRS resource I actually recommend feeding into an AI chatbot[00:13:33] The seed and harvest analogy that explains Roth vs traditional once and for all[00:17:08] Lisa's case study begins: a year and a half of doing it wrong without knowing it[00:22:36] Your one action item: get the match and open the IRAEmail me at [email protected]