9. Roth 401k/403b

9. If your company offers a Roth option take it. Any money you put in plus gains  will be tax free when you withdraw it.

The money YOU put in goes into the Roth portion of your 401k/403b. It will grow tax free but will (unlike the old 401k/403b) not reduce your annual taxable income. The money your company puts in (The match) will be in a traditional 401k/403b and will not be considered taxable income. You will have to pay ordinary income taxes on that money when you withdraw it (If your at least 59.5). It will also be subject to mandatory distributions at age 70.5. 

In my opinion it's a good thing to have multiple types of accounts (Roth vs Traditional). In retirement you may need money but do not want to increase your taxable income. The Roth is the clear choice here. You have already paid the taxes on this money plus the gains are tax free.

Or if you are far enough away from your next tax bracket you can use your traditional account for your needs. Keep in mind the mandatory distributions starting at age 70.5. If you haven't taken your distribution for the year and a need arises then the traditional account or combination of the two would be the winner.


I like to have options!