What a 401(k) and a Roth IRA Are, and Why You Should Care Right Now

If, your, employer, offers, a, 401(k), match, and, you're, not, contributing, enough, to, capture, the, full, amount,, you, are,, in, a, very, literal, sense,, leaving, free, money, on, the, table., A, 401(k), is, an, employer-sponsored, retirement, account:, you, contribute, a, portion, of, your, paycheck, (often, with, pre-tax, dollars,, reducing, your, taxable, income, right, now),, and, many, employers, add, a, matching, contribution, on, top,, commonly, something, like, matching, 50%, or, 100%, of, what, you, contribute,, up, to, a, certain, percentage, of, your, salary., That, match, is, additional, compensation, you, simply, don't, receive, if, you, don't, contribute, enough, to, earn, it.

A, Roth, IRA, works, differently., It's, an, individual, account, (not, tied, to, any, employer),, funded, with, money, you've, already, paid, tax, on,, in, exchange, for, tax-free, growth, and, tax-free, qualified, withdrawals, in, retirement., The, core, tradeoff, between, traditional, (401(k), or, IRA), and, Roth, accounts, is, simply, when, you, pay, tax,, now,, or, later., And, which, timing, works, better, depends, on, your, current, versus, expected, future, tax, situation.