Roth IRA

A Roth IRA provides no tax deduction for contributions, but the investments grow tax-free, algostocks

and qualified withdrawals during retirement are also tax-free.

Tax Benefits

Tax-Free Growth: Investments within a Roth IRA grow without being taxed, maximizing growth potential.
Tax-Free Withdrawals: Qualified withdrawals during retirement are not taxed, providing significant tax savings.
No Required Minimum Distributions (RMDs): Unlike Traditional IRAs, Roth IRAs do not require minimum distributions, offering more flexibility in retirement.

401(k) and Roth 401(k)

Employer-sponsored retirement accounts such as 401(k) plans also offer tax advantages. algostocks.com

Contributions to a traditional 401(k) are made pre-tax, reducing taxable income, while contributions to a Roth 401(k) are made after-tax, but withdrawals during retirement are tax-free.

Tax Benefits

Employer Matching Contributions: Many employers offer matching contributions, which are essentially free money for retirement.
Tax-Deferred Growth: Investments grow tax-deferred in a Traditional 401(k), and tax-free in a Roth 401(k).
Higher Contribution Limits: 401(k) plans have higher contribution limits compared to IRAs, allowing for greater tax-advantaged savings.