Talking About the 401(k)
Financial advisors should discuss 401(k) plans with their clients. If the client is not already saving in a 401(k), they could be missing out on benefits like matching employer contributions. The ability to receive matching contributions is one of the reasons why the 401(k) is …show more content…
Roth IRAs are created with after-tax dollars. This means that clients who will have a higher tax bracket when they start their distributions can save significantly. In addition, a Roth IRA does not require minimum distributions at age 70.5. [4] IRAs also tend to be easier for your clients to understand because their rules are set by the Internal Revenue Service instead of individual companies.
Another selling point for Roth IRAs is that the client can borrow from their account. A 401(k) lacks this option, so a client loses some of their access to funds in an emergency. If the client is still worried about the benefits of having an IRA, they can always rollover just part of their balance. As long as the client follows the contribution limits each year, they can contribute to both an IRA and a 401(k) plan to maximize their retirement savings.
To get the most out of retirement savings, most clients will need more than just a 401(k). An IRA offers clients the ability to maximize their investments. Meanwhile, options like an annuity can provide a guaranteed income during