In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question:  What is a Roth 401(k) or 403(b) account?

"First, let's understand what 401(k)s and 403(b)s are. They are plans created by employers whereby the employees can contribute to their own retirement. The 401(k) is for for profit companies. The 403(b) is for nonprofit companies.

If the employer wishes to, they can create Roth versions of those same accounts. Now, under a Roth 401(k) or 403(b), the contributions that the employee makes are not tax deductible. They are made with after tax dollars, but when you get to retirement, all of that accumulation, all of the growth is going to come out to the employee on a tax free basis. That's a huge advantage over a conventional 401(k) or 403(b)."


To see more videos by Scott Farnsworth, see our Frequently Asked Questions Videos page, Tax-Free News page, or our YouTube channel.  

What is a Roth 401(k) or 403(b) account?