When it comes to retirement accounts, you have many choices, including a traditional IRA, a Roth IRA, a 401(k) and, now, a Roth 401(k). You can use these retirement savings vehicles for estate planning purposes as well.
Weigh the choices
The main difference between traditional and Roth accounts lies in the tax treatment of the contributions and distributions. Even though contributions to traditional accounts generally reduce your taxable income, distributions are subject to tax. Roth contributions, on the other hand, don’t provide a tax benefit, but distributions generally are tax free.