What is better? 401k roth or 401k?

Ahhh, the million dollar question for Roth accounts...

And the answer is - it depends (sorry). Unfortunately, you need a crystal ball for this one. Your decision will likely come down to what you believe the future holds. You need to consider several factors, but you basically have two courses of action to take.

1) Take the sure thing - Contribute to your Roth 401(k), paying tax upon the contributions at your current income tax bracket.

2) Let it Ride - Contribute to your Regular 401(k), defer taxes upon that income, and enjoy tax-free compounding of interest until you are able to take a qualified distribution (usually at retirement) at which time you will pay taxes on the principal and earnings at your future income tax rate.

I suppose a third option would be to hedge your bets and contribute some money to both accounts so that you have some tax-related diversification in your retirement account (but let's not get that technical).

So, look into your crystal ball...

Do you believe that you will be in a higher tax bracket at retirement age than you are right now? If so, the Roth option may be the right choice for you as you will likely pay less in tax today than you would years from now in retirement. Likewise, if you believe you will be in a lower tax bracket in retirement, it makes more sense to simply contribute to your Regular 401(k), enjoy your tax deferral over the years, and pay the piper upon retirement.

There are several wild cards to consider in this scenario, not the least of which is the possibility that tax brackets change. If you want my honest opinion, I think it is naive to assume that the historically low tax brackets we enjoy today will be around in 20 or 30 years. I am 31 years old and, without getting political, just look at the current landscape of our country and its budget deficits. The cost of wars, strains on social security from aging baby boomers, etc, leads me to believe that the government is mortgaging our nation's current problems and our generation will likely have to pay for it. And how will we pay for it? Higher taxes. All things being equal, if I were you and I had more than 15 years or so until retirement, I would opt for the Roth 401(k).

By the way...depending upon your plan's provisions, if your employer matches contributions to your Regular 401(k) plan, then you should still qualify for the match, regardless of whether you contribute to the Roth 401(k) or your Regular 401(k). I think some of the other answerers on here were getting confused by your question - comparing a Roth IRA (not a Roth 401(k)) with a Regular 401(k).

It depends on your objective- In a Roth 401k you pay taxes on the money you invest at the time you invest it and when you cash out your Roth IRA you don't pay taxes on it then. In a traditional 401k you subtract the amount from your income when you file income taxes in the investment year but pay capital gains taxes on it when you cash out. Based on how your tax bracket changes as you retire or approach retirement vs. how much money you hopefully made on your investment either one could work to your advantage. Most younger investors use a Roth because of the length of time they plan to leave the account before withdrawal is advantageous compared to paying taxes in the gains at the fund disbursement time.

If your employer matched, 401K would be best for you.

401k, however it will depend on your case & current & future tax bracket

401k roth - for the tax benefits

Depends on investors tax bracket and income.

The scary thing about a ROTH is that the GOVERNMENT reserves the right to change this law!!!!!! Saying that, Iâ€™d say either one would be good, however if youâ€™re going to utilize a ROTH 401K then invest money into an IRA or vice versa.

The 401k Roth is a new type of 401k. Not all retirement plans/companies offer the 401k roth. If your's does, then you're lucky. I like to use my regular 401k for retirement savings only to get the company's matching contribution. The regular 401k is also nice because it lowers my current taxable income, which is a benefit to me at this very moment even though I'm many years from retirement.

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