Roth Feature Considerations

Using a roth at different stages in your career can help to diversify your tax preferred savings

Roth features have been on the march since 1998 when they were introduced into IRA's. Their employer plan (401k, 403b, 457b) brethren were then introduced in 2006. For retirement savers, the use of these features really depends on your overall tax liability. For those with some variability in their income, it could change from year to year which (pre-tax or roth) you should use.

For most of us the most important thing is to save. Assuming we are saving at an appropriate rate, evaluating the taxation of those savings is step two. Since these have only been features in plans in the last fifteen to twenty years, a lot of retirement savers have the bulk of their money in pre-tax savings. That just means there is a big IOU attached to those dollar amounts that will eventually go towards their tax liability. Working with your advisor can help to determine the best path for you and when to use these potentially valuable deferral sources.