Robert Brokamp: Choosing the right retirement account and the long-term return of gold. That and more on this Saturday Personal Finance edition of Motley Fool Money. I'm Robert Brokamp, and this week, I speak with financial planner and CPA Sean Mullaney about why some investors should favor pre-tax traditional retirement accounts, despite all the benefits of Roth accounts. But first, hear a few items from the news last week. First up, we turn to the latest weekly asset allocation review from Jurrien Timmer, ...

The IRS is changing how Americans can make catch-up contributions to their workplace retirement accounts, which could have significant implications for retirement planning and budgeting. A new rule took effect at the outset of 2026 that altered how high-income earners make catch-up contributions to their workplace 401(k) retirement plan, as those over the age of 50 whose earnings subject to payroll tax are $150,000 or more must make catch-up contributions to a Roth 401(k). The change, which was required ...

Key Points Don't assume a Roth account is right for you. Don't assume you can raid your Roth IRA or 401(k) at any time. Don't assume that you should keep your entire retirement nest egg in a Roth. The $23,760 Social Security bonus most retirees completely overlook › When it comes to saving for retirement, you have choices. You could contribute money to a traditional IRA or 401(k) for the tax break on the funds you put in. Or, you could save for retirement in a Roth IRA or 401(k). Roth retirement ...

Core Points - Roth IRAs allow tax-free withdrawals of contributions and earnings at retirement, provided five years have passed since the first contribution [1][4] - Beneficiaries of Roth IRAs do not owe taxes on inherited accounts, making them advantageous for estate planning [2] - Early withdrawals of investment earnings may incur income tax and a 10% penalty, although exceptions exist for certain qualified expenses [3][5] Contribution and Income Limits - In 2026, the contribution limit for Roth IRAs is set to increase to $7,500, with an additional catch-up contribution of $1,100 for individuals aged 50 and older [9] - Single filers can contribute to a Roth IRA if their modified adjusted gross income is below $153,000, with reduced contributions allowed up to $168,000; for married couples filing jointly, the limits are $242,000 and $252,000 respectively [16] Investment Options and Strategies - Roth IRAs can be used for a variety of investments, including stocks, mutual funds, and ETFs, which typically offer higher returns compared to traditional bank accounts [3][18] - The Roth IRA is a favorable option for rolling over funds from a Roth 401(k), allowing for broader investment choices without tax liabilities [8] Comparison with Traditional IRAs - Unlike traditional IRAs, Roth IRAs do not provide an upfront tax deduction, but allow for tax-free withdrawals in retirement [6][13] - Traditional IRAs have no income restrictions for contributions, but tax deductions are subject to income limits if the individual has a retirement plan at work [14][17]

Key Points Traditional IRAs and 401(k)s eventually force seniors to start taking withdrawals from their account. Required minimum distributions (RMDs) could lead to higher tax bills and other consequences. They could also serve as an opportunity to enjoy retirement to the fullest. The $23,760 Social Security bonus most retirees completely overlook › For many people, saving for retirement in a traditional IRA or 401(k) seems like a good idea until their senior years roll around. At that point, ma ...

Core Insights - The 401(k) contribution limits for 2026 will increase to $24,500 from $23,500 in 2025, with catch-up contributions for individuals aged 50 and over rising to $8,000 from $7,500 in 2025 [2] - A significant change for higher-income earners is that starting in 2026, catch-up contributions for those earning over $145,000 will need to be made to Roth 401(k)s, impacting retirement planning strategies [3][4] Contribution Limits - The standard contribution limit for 401(k)s in 2026 is set at $24,500, an increase from $23,500 in 2025 [2] - Catch-up contributions for individuals aged 50 and over will increase to $8,000, while those aged 60 to 63 will have a catch-up limit of $11,250, unchanged from 2025 [2] Impact on Higher-Income Earners - Higher-income individuals earning over $145,000 will be required to make catch-up contributions to Roth 401(k)s starting in 2026, which may lead to increased taxable income in the following tax year [3][4] - This change necessitates a reassessment of retirement planning for higher-income earners who previously relied on pre-tax contributions [3] Roth 401(k) vs. Traditional 401(k) - Contributions to Roth 401(k)s are made with after-tax income, while traditional 401(k) contributions are made pre-tax, reducing taxable income [5] - Withdrawals from Roth 401(k)s are tax-free, and there are no required minimum distributions (RMDs) for Roth accounts [5]

Group 1 - The article discusses various tax-advantaged accounts for saving money, including traditional IRAs, 401(k)s, and Roth accounts, highlighting their benefits such as pre-tax contributions and tax-free withdrawals [1] - Health Savings Accounts (HSAs) are emphasized as a valuable savings tool that combines features of traditional and Roth retirement accounts, allowing for tax-free contributions, gains, and withdrawals for qualifying healthcare expenses [2][7] - For individuals turning 55 in 2026, there is an opportunity to make an additional $1,000 catch-up contribution to their HSA, which can enhance their savings strategy [3] Group 2 - Contribution limits for HSAs in 2026 are set at $4,400 for self-only coverage and $8,750 for family coverage, encouraging higher contributions to shield more income from taxes [4] - The article advises against using HSA funds immediately, suggesting that individuals should allow their HSA to grow over time by paying medical expenses with other funds [5][8] - It highlights the importance of reserving HSA balances for retirement, as healthcare costs may increase with age, making a larger HSA balance beneficial for managing expenses during retirement [9]

Core Insights - The article discusses the feasibility of generating a $100,000 annual retirement income from a $2.5 million nest egg, emphasizing the importance of considering both withdrawal rates and taxes [2][4][8] Withdrawal Rate Considerations - Traditionally, a 4% withdrawal rate was recommended for a sustainable retirement income, allowing for a $100,000 annual withdrawal from a $2.5 million account [2] - Experts have revised this recommendation to a more conservative 3.7% due to lower projected returns and longer life expectancies [3] - Individuals willing to take on more risk may still opt for the 4% rule, but it is advised to save more for a financial cushion [4] Tax Implications - Taxes play a significant role in determining the actual income available for spending during retirement [5][8] - Utilizing Roth accounts can mitigate tax concerns, allowing for tax-free withdrawals if rules are followed, thus enabling retirees to spend the full $100,000 without tax deductions [6][8]

Core Insights - The third quarter of 2025 saw significant improvements for investors, with record highs in retirement products reported by Fidelity, including 401(k)s and IRAs [1] - The average 401(k) balance reached $144,400, a 20% increase since Q3 2020, while the average IRA balance was $137,902, reflecting a 17% increase over the same period [1] - The number of 401(k) millionaires increased by 10% and IRA millionaires by 11.5% from Q2 to Q3, indicating a growing trend in high-net-worth investors [2] Contribution Trends - The contribution rate for 401(k)s remained stable at 14.2% in Q3, close to the ideal 15% range, suggesting strong employer support and investor resilience amid market fluctuations [3] - Younger generations are increasingly opting for Roth 401(k)s, with approximately 20% of Gen Z and 19% of millennials choosing this option, indicating a shift towards long-term investment strategies [4] - The trend towards Roth accounts is also evident in IRAs, with 95% of Gen Zers investing in a Roth IRA, highlighting a preference for personalized investment decisions [5] Regulatory Changes - The IRS has announced increased contribution limits for 401(k)s to $24,500 (up from $23,500) and for IRAs to $7,500 (up from $7,000), along with an increase in catch-up contributions for IRAs for those over 50 to $1,100 from $1,000 [6]

Group 1 - Consistent saving during working years is crucial for a secure retirement, with options like 401(k) plans and IRAs available for retirement savings [1] - 401(k) plans simplify retirement saving through automatic payroll deductions, ensuring contributions are made without the need for manual transfers [2] - Companies often match employee contributions to 401(k) plans, and missing out on this match can significantly impact long-term growth potential [4][5] Group 2 - To maximize workplace match benefits, employees should understand the matching structure and adjust their savings rates accordingly, potentially by cutting back on other expenses [6] - High fees associated with certain investment options in 401(k) plans can erode returns, suggesting a potential shift to lower-cost index funds for better performance [8]