Tax concepts//50s
Traditional 401(k) versus Roth 401(k).
Pay the tax later or pay it now. Who each one generally suits, and why a lot of high earners use both.
Transcript
This is how you lower your taxable income, and this is how you plan for retirement withdrawals. This is a traditional 401(k). This is a Roth 401(k). One uses pre-tax dollars. The other uses after-tax dollars.
The traditional is for people looking for the tax break today in a high bracket. The Roth is for people who care less about the break today and want the growth to come out later without tax. Both are important, and you can use both. The traditional is for people who do not want to pay the tax right now and would rather pay it down the road. The Roth is for people who would rather pay it now for more flexibility in retirement.
These are two good vehicles for high earners. You can do half and half. That is why it is important to learn this stuff.
These are transcripts of short educational videos Malik published on his own social profiles, edited for readability and to remove phrasing that could read as a personal recommendation. They are general education and marketing, not tax, legal, or investment advice, and not a recommendation to buy, sell, exercise, donate, hedge, or hold any security or to use any account, plan, or strategy. Contribution limits, phase-outs, and tax treatment change and depend on your facts. Talk with your own tax, legal, and advisory professionals before acting.