Whats Better 401k or Roth - For Long Term Rental Loans

Whats Better 401k or Roth - For Long Term Rental Loans

Louisville, KY · Member since 2014 · 34 posts · 0 votes

What is a better choice a regular employer 401k or a roth 401k.

Looking to build funds and in a couple of years take loans against the 401k to buy real estate. What would be a better choice for this?

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  • Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    11y

    @Senad Salihovic

    @Senad Salihovic

    If you can afford to do so from a tax perspective, it will be best to make Roth 401k contributions. Pretax 401k contributions reduce your taxable income in the year of the contribution whereas Roth 401k contributions are made with after tax funds, but the earnings grow tax free. 

    See following website to learn about the Roth 401k rules. 

    http://www.irs.gov/Retirement-Plans/Retirement-Pla...

    See following website to learn about the 401k participant loan rules. 

    http://www.irs.gov/Retirement-Plans/Retirement-Pla...

    See following website to learn about disallowed 401k investments.

    http://www.irs.gov/Retirement-Plans/Retirement-Pla...

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    11y

    @Senad Salihovic

    as a 24-year old you have 36+ years to grow your wealth tax-free. While you are giving up some tax benefits now, we don't know the tax rates 30+ years from now and it unlikely that taxes are going down... so you can't go wrong contributing at least some of your earnings into Roth.

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