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Traditional vs Roth 401(k): How to Choose
Tax now or tax later? Compare traditional and Roth 401(k) contributions for your income and retirement timeline.
July 9, 20267 min readBy MyWealthForge
Key Takeaways
- 1Traditional 401(k): tax deduction now, taxed on withdrawal.
- 2Roth 401(k): no deduction now, tax-free withdrawals.
- 3Choose Roth if you expect higher taxes in retirement.
- 4Many savers split contributions for tax diversification.
Your 401(k) tax choice affects take-home pay today and retirement income tomorrow. There is no one-size-fits-all answer.
Model growth with our 401(k) calculator.
Traditional 401(k) Benefits
Immediate tax savings lower your taxable income. Best when you are in a high bracket now and expect lower income later.
Understand federal tax brackets.
Roth 401(k) Benefits
Tax-free withdrawals in retirement. No RMDs for Roth 401(k) balances (as of SECURE 2.0).
Pair with Roth IRA strategy for flexibility.
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