This story on 401(k) borrowing is sponsored by America First Credit Union – The member-owned, not-for-profit cooperative financial institution is the largest credit union in the state of Utah.

Chances are, your employer has a 401k plan to help you save for your retirement.  You should definitely do it.  But they will probably also offer you a choice between a 401k and a Roth 401k.  What should you do?

Here is some quick info to help you make this decision.

Listen to 401k tips from America First Credit Union CFO Rex Rollo.

A quick 401k Background

401k is a section of the US Tax Code that allows you to receive a tax benefit by saving for retirement.  If your employer offers this you should definitely do it. Rex Rollo, CFO of America First Credit Union notes, “The more you contribute and the earlier you contribute the more time your retirement account has to earn money to provide that benefit we want in our future retirement.”

Standard 401k

A standard 401k allows you to put money in before you pay taxes on it.  You’re then taxed in retirement when you withdraw the savings.  The idea is that in retirement your tax rate will be lower than when you’re fully employed.  This is true for many retirees, but not for everyone.  It’s actually common for retirees to experience an uptick in income especially if they have a strong pension or other savings device.

Roth 401k

In a Roth 401k, you contribute money after paying taxes.  Some people prefer this because when they withdraw money in retirement they won’t have to worry about how much they’ll lose to taxes.  This might be a good choice if you’re already in a low tax bracket and are concerned you’ll be paying higher taxes in the future.