BRIDGEPORT, W.Va (WDTV)- Question: Which is better, a 401(k) or a Roth IRA?
Answer (John Halterman, Beacon Wealth Management): "One thing I always say is you have to roll with the free money. What I mean by that is that if your employer is matching you on contributions and they're giving you free money, the first thing you have to absolutely do is take the employer match.
Simply, if they're giving you let's say up to 6% whether it's dollar for dollar or even a percentage, you have to make sure you have to put in at least 6% yourself. That way you can get all the free money first."
Question: What comes after the free money?
Answer (John Halterman, Beacon Wealth Management): "After the free money, the matching money, the next thing you have to really be thinking about is tax benefits.
The second thing on the Roth is that the Roth IRA is 100% tax-free after the age of 59 and a half. But you get no tax deduction upfront. What you have to consider is what is more important, putting money on a pretax basis, were you get a tax reduction now? Or an after-tax basis where you get tax-free down the road?
My personal opinion is that if you're making less than $100,000 as a single person or less than $200,000 as a family, you definitely have to consider the tax-free money because like free money from your employer, I love the free money and both of those are free money to me."