July 25, 2013

What is the difference between a traditional 401K and a Roth 401K? How does a person decide which one is best for them?

2 thoughts on “July 25, 2013”

  1. Katherine Graham says:

    Roth contributions are made on an after-tax basis, and traditional contributions are made on a pre-tax basis. Traditional contributions reduce your taxable income for this tax year. If you think you will be taxed at a higher rate later in life, choose the Roth 401K. If you think you will pay higher taxes now, select the traditional 401K. Low to moderate income people would probably be better served with the Roth 401K, while high income people should consider the traditional 401K.

  2. Mike Finley says:

    Outstanding response, Katherine! I have nothing to add.

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