Is Roth 401k Really Better Than Traditional for Your Retirement?

In this video, I’ll explain the key differences between a Traditional 401(k) and Roth 401(k)—two popular retirement savings options offered by employers. Understanding how these accounts differ can help you make smarter financial decisions and optimize your retirement savings strategy. Both plans offer tax advantages, but knowing which one suits your situation depends on when you want to benefit from those tax savings—now or later.

The Traditional 401(k) allows you to make pre-tax contributions, reducing your taxable income today. However, withdrawals in retirement will be fully taxed as ordinary income. On the other hand, the Roth 401(k) uses after-tax contributions, meaning you pay taxes upfront. But in retirement, your withdrawals—including any growth—are tax-free. Choosing the right plan can impact your future income, so understanding these distinctions is crucial.

We’ll walk through the tax benefits of both Traditional and Roth 401(k) accounts and help you understand which option might work best for your financial goals. I’ll discuss how contributions are taxed under each plan and explain the impact on your paycheck today vs. income in retirement. You’ll also learn which type of account may be better based on factors like your income bracket, future tax expectations, and retirement timeline. Whether you’re early in your career or close to retirement, I’ll provide quick insights to help you decide the best way to save.