5 Biggest 401(k) Mistakes to Avoid

This article takes a look at the 5 biggest 401(k) mistakes to avoid. If you wish to check out our detailed analysis on unraveling the controversy surrounding 401(k) plans, you may go to 13 Biggest 401(k) Mistakes to Avoid.

5. Failing to Differentiate Between 401(k) Account Types

There are two types of accounts workers come across when saving for retirement. This is the traditional 401(k) and the Roth 401(k). In a traditional 401(k), contributions are pre-tax, thereby providing upfront tax benefits. However, withdrawals in retirement are subject to taxation. On the other hand, Roth 401(k) contributions are taxed when made, but the withdrawals in retirement are tax-free. This ensures you retain the full accumulated growth. Choosing between the two depends on aligning with your specific needs and financial objectives.