Traditional versus Roth - Bogleheads
Traditional versus Roth refers to the common investment decision of whether to use traditional (pre-tax) or Roth accounts. You must make this decision when your employer offers both a traditional and Roth 401(k), or when you can deduct a traditional IRA contribution or use a Roth IRA, or when you consider leaving money in a traditional account or converting some to Roth. The better option is the one that gives you (or your heirs, if you are estate planning) more spendable income after all taxes are paid. Preference for one account type or the other is fundamentally a tax planning question. In a traditional retirement account such as a deductible traditional IRA or traditional 401(k), your contributions are deductible - no tax is paid on account growth while the money remains in the account, and withdrawals are taxed as ordinary income. In a Roth retirement account such as a Roth IRA or Roth 401(k), your contributions are not deductible, but all future growth and withdrawals are tax-fre
Traditional versus Roth refers to the common investment decision of whether to use traditional (pre-tax) or Roth accounts. You must make this decision when your employer offers both a traditional and Roth 401(k), or when you can deduct a traditional IRA contribution or use a Roth IRA, or when you consider leaving money in a traditional account or converting some to Roth. The better option is the one that gives you (or your heirs, if you are estate planning) more spendable income after all taxes are paid. Preference for one account type or the other is fundamentally a tax planning question. In
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