Roth 401(k): The other employer-based retirement plan

Source: Herb Weisbaum, NBC News

The Roth 401(k), like a Roth IRA, lets you build a nest egg that grows tax-free, but relatively few workers take advantage of this opportunity.

With the traditional 401(k), contributions are pre-tax money — taken out of your paycheck before your wages are taxed.The Roth 401(k) flips this model on its head. It’s funded with wages that have already been taxed, so withdrawals are free in retirement.

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