Why Don't West Pharmaceutical Services Workers Utilize Roth IRA Accounts?

Healthcare Provider Update: West Pharmaceutical Services: Healthcare Provider West Pharmaceutical Services is a global leader in the development and manufacturing of innovative delivery systems for injectable drugs and healthcare solutions. The company serves various sectors including pharmaceutical, biotechnology, and medical device industries. As a prominent entity in this space, they work with numerous healthcare providers to ensure their products meet the stringent requirements needed for safe and effective patient care. Potential Healthcare Cost Increases in 2026 Healthcare costs for West Pharmaceutical Services employees are expected to rise considerably in 2026, influenced by several market dynamics. Record increases in Affordable Care Act (ACA) premiums could pressure employers to shift more costs onto employees, potentially increasing out-of-pocket expenses significantly. Approximately 51% of large employers are anticipated to adjust their healthcare benefits by raising deductibles and out-of-pocket maximums. This, combined with soaring medical costs driven by inflation and high drug prices, will likely increase financial burdens on employees, making 2026 a pivotal year for healthcare affordability. Click here to learn more

For West Pharmaceutical Services employees, managing retirement funds in addition to the conventional 401(k) plans is a great way to improve the overall financial health in the later years. As Patrick Ray from The Retirement Group often insists, the combination of strategies such as Roth IRAs helps to achieve two-fold tax relief through current tax benefits and future tax deferral that are crucial in meeting long-term retirement goals.'

'According to Michael Corgiat from The Retirement Group, West Pharmaceutical Services executives should take both their 401(k) and Roth IRA contributions into consideration when planning for their retirement. This way, the employees receive the present tax deduction and also stand to gain tax-free distributions in the future, thus providing a good balance between the contribution and the return in the retirement planning.'

'In this article we will discuss: What is the difference between 401(k) and Roth IRA accounts and what are the benefits of each? The importance of varying the retirement investments by using both account types. What are the tax benefits of 401(k) and Roth IRA and how to contribute to them. As a rule, in the professional sphere, retirement planning is one of the most important aspects of financial management. Although many senior executives and West Pharmaceutical Services professionals have spent much attention on their 401(k) plans, there are a lot of benefits that can be gained through diversifying retirement investments. In the professional realm, preparation for retirement is a critical element of financial planning. While many senior executives and West Pharmaceutical Services professionals have diligently contributed to their 401(k) plans, diversifying retirement investments can yield significant benefits.'

'The Dual Benefit of 401(k) and Roth IRA'

'Distinguishing Between 401(k) and Roth IRA Eligibility Criteria: A 401(k) is an employer-sponsored plan. On the other hand, the Roth IRA is available for any person who can open an IRA provided they meet the income limitations. It should be noted that high-income earners can use the ‘backdoor Roth IRA’ strategy to overcome the income limits.'

'Prominent Providers: Large companies including Charles Schwab, Fidelity, Ally Bank, and robo-advisors like Wealthfront and Betterment are well-known for their Roth IRA products. Their services include a variety of investment products and choices to suit different financial needs.'

'Taxation Principles: Traditional 401(k) and Roth IRA both have tax benefits but in different phases. The 401(k) is a pre-tax contribution plan that defers tax on them until withdrawal. By contrast, Roth IRA contributions are made with after-tax money and the withdrawals are made tax free.'

'Introducing Roth 401(k): Many West Pharmaceutical Services employers have the Roth 401(k) available to choose from, which is a combination of the 401(k) and the Roth IRA. It is an after-tax contribution, but the distributions are tax free.'

'Withdrawal Norms: Among the two, Roth IRA is the most convenient as it allows tax and penalty-free withdrawal of contribution at any time. But, withdrawing earnings before age 59.5 will incur penalties. 401(k) distributions are penalized and taxed before the age of 59.5, although this is not always the case.'

'Contribution Limits: The Roth IRA contribution ceiling is $6,500.'

'The Merits of Dual Contributions: West Pharmaceutical Services employees are in a unique position to benefit from contributing to both the 401(k) and the Roth IRA at the same time. It’s like getting the best of both worlds in terms of taxes: the 401(k) for immediate tax relief and the Roth IRA for future tax relief. This makes the challenge of predicting future tax brackets less onerous.'

'The IRS offers a supplementary benefit to West Pharmaceutical Services employees nearing retirement called the Earned Income Tax Credit. This allows people over 50 to contribute an extra $1,000 each year to their Roth IRA, above the normal limit. The intention of this provision is to assist those who may not have begun saving for retirement or who wish to increase their retirement savings. Using this provision, retirees may be able to accumulate a significant amount during the last decade before retirement.'

'The allocation between 401(k) and Roth IRA If one has both accounts, the next challenge is to determine the contribution divide. It would be ideal to contribute to both accounts to the max, but this is not always feasible due to financial restrictions. A reasonable approach would be to contribute enough to the 401(k) to receive the matching contribution from the employer, effectively tripling the savings. Therefore, a general rule of thumb is to allocate 10 to 15 percent of one’s pretax income, including employer contributions, across all retirement accounts. For example, if a person contributes 6% to the 401(k), matched by the employer, then 12% pre-tax has been allocated. The remaining 3% can then be contributed to a Roth IRA.'

'Conclusion: It is important to diversify in order to get the most out of your retirement savings. Adding a Roth IRA to a traditional 401(k) provides more opportunities to take advantage of different tax benefits, flexible withdrawal rules, and unique contribution limits. As senior professionals and potential retirees, it is important to develop a good strategy now to guarantee a secure retirement in the future. Managing retirement funds with only a 401(k) is like trying to cross the huge ocean with just one sail. A Roth IRA is like having a second, more agile sail that can undoubtedly help you move forward. They collect different financial winds and therefore use two sails to make sure that you reach your destination comfortably but more efficiently in your old age.'

'Additional Fact: Some of the West Pharmaceutical Services workers may be shocked by the fact that many of their colleagues do not fully understand how to use Roth IRA accounts. According to the most recent survey conducted by the American Association of Retired Persons (AARP), only 32% of West Pharmaceutical Services employees take advantage of Roth IRAs. This lack of utilization may be attributed to unawareness of the benefits, eligibility or simply the ignorance of how Roth IRAs can be used to complement their 401(k) plans.'

'Additional Analogy: Working or retiring without optimizing for Roth IRA is like getting on a huge ocean without a second sail when you can easily get a second sail. It is similar to having the option between conventional and solar-powered navigation. The Roth IRA is that modern, efficient and flexible solar sail that attracts all the financial winds to take you forward. However, many West Pharmaceutical Services workers are happy with just the traditional sail (401(k)), without realizing the tax benefits and future freedom from taxation, the chance to diversify risks and the ability to navigate toward a comfortable retirement with less turbulence. It’s like having a high-tech tool available to you and not using it to its full potential.'

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'The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at  www.theretirementgroup.com .'

Sources:

1. Fidelity Investments. 'Roth 401(k) vs. Roth IRA: Which is right for you?' Fidelity,  https://www.fidelity.com . Accessed 5 Feb. 2025.

2. Ramsey Solutions. 'Roth IRA vs. 401(k): Which Is Better for You?' Ramsey Solutions, Oct 3, 2024,  https://www.ramseysolutions.com . Accessed 5 Feb. 2025.

3. Investopedia. 'Roth IRA vs. 401(k): What’s the Difference?' Investopedia,  https://www.investopedia.com . Accessed 5 Feb. 2025.

4. Business Insider. 'Roth IRA Vs. Roth 401(k): Comprehensive Comparison.' Business Insider,  https://www.businessinsider.com . Accessed 5 Feb. 2025.

5. The Motley Fool. 'Why Roth IRAs Are a Great Retirement Savings Option.' The Motley Fool,  https://www.fool.com . Accessed 5 Feb. 2025.'