The majority of company retirement plans now offer both a Traditional and Roth 401(k) option but do not provide the resources or analysis to determine which is better for your specific circumstance.
Is the Roth option the best retirement account? High income earners have a difficult decision to make between the two plans, while lower income earners can almost always benefit more from the Roth 401(k).
The Traditional 401(k) retirement account allows you to contribute part of your pre-tax income into the plan, thereby reducing your taxable income by the total amount of your contribution.
A Roth 401(k) differs from a traditional plan in that contributions are made with post tax dollars, so money contributed will not reduce your taxable income.
Although you will not receive any immediate tax deductions from a Roth contribution, benefits will come later.Contributions made into a Roth 401(k) will never be taxed again, and any growth in the Roth account will also never be taxed for life.