A common question faced by retirement savers is which type of retirement plan should I be using? After all, there a many offerings and often times investors are confused between the differences . Most savers often have limited dollars to earmark for their retirement goal and want to be sure they are taking full advantage of all the possible benefits available.

Take the “ Roth IRA / 401(K)” debate. These are two different retirement plans offering different features and benefits for investors. A Roth IRA provides the opportunity to save after tax dollars into an IRA account, which will grow tax deferred until one needs them in retirement. Qualified withdrawals are not taxable in retirement, as long as the funds have been invested at least 5 years. The obvious benefits with the Roth are the tax deferred growth and the possibility of tax free withdrawals. However, do those features outweigh the different benefits available in ones 401(k)? 401(k) contributions are pre-tax which provides the saver an immediate tax benefit over the delayed benefit offered through the Roth. Also, many times 401(k) plans offer a matching contribution that can be a significant addition into one’s 401k plan. However, distributions from your 401(k) are taxable and does that neutralize the addition of the matching dollars? Since some folks are either not eligible for both, or do not have sufficient funds to fund both types of plans, which is better?

As is always the case, everyone’s situation is unique and consulting one’s own advisor and tax professional is always recommended. Here’s one approach, however, that you may want to discuss with your advisor. Fund your 401(k) plan first, up to the amount needed to maximize the match provided by your employer. Each plan is different so consult your own plan to determine what % is required by your plan. If you still have dollars available after saving this amount in your 401(k), save those dollars into your Roth. Lastly, any funds still remaining after the Roth, can be placed into your 401k as well.

This approach allows folks take advantage of both the plans, while ensuring to maximize the benefits of the company match.

Registered Representative, Securities offered through Cambridge Investment Research., A Broker/Dealer, Member FINRA/SIPC and Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a registered Investment Advisor. Reiner Financial Group, LLC and Cambridge are not affiliated. Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal. With any investment vehicle, past performance is not a guarantee of future results