Roth vs. Traditional 401(k): Which One’s Right for You?

May 7

When it comes to saving for retirement, one of the most common questions I get is:

> “Should I choose a Roth 401(k) or a Traditional 401(k)?”

It’s a great question—and the truth is, it depends on your income, tax bracket, and long-term goals. But you don’t have to guess. There’s a simple framework I use to help clients decide which route makes the most sense.

Quick Recap: What’s the Difference?

Roth 401(k):

You pay taxes on your contributions now
Withdrawals in retirement are tax-free
Best if your tax rate today is lower than it might be later

Traditional 401(k):

You don’t pay taxes on contributions now
You’ll pay taxes on withdrawals later
Best if your tax rate today is high and might be lower in retirement

Use This Tax Bracket Framework

Here’s how to decide based on your current federal tax bracket (2025 figures for single filers):

Tax Bracket Recommended Option - Why It Makes Sense

10–12% Roth 401(k) - You’re paying very little in taxes now. Lock in that low rate and enjoy tax-free growth.

22–24% Roth or Traditional - This one depends. If you expect income growth, lean Roth. Closer to retirement? Traditional might help you reduce taxes now.

32%+ Traditional 401(k) - You’re in a high tax bracket now. Reduce your tax bill today and plan for Roth conversions later at a lower rate.

Examples to Bring It Home

Early-career earner making $40,000
→ Likely in the 12% bracket
→ Roth 401(k) is a no-brainer. You’ll never miss the small tax hit now, and you’ll thank yourself later.

Mid-career earner making $75,000
→ In the 22% bracket
→ Depends on your long-term goals. If you expect income to grow, lean Roth. Otherwise, you could mix both.

High-income earner making $200,000
→ In the 32% bracket
→ Traditional is likely better. You can defer taxes now and take advantage of Roth conversions in retirement or during lower-income years.

A Final Tip: Think in Buckets

Don’t feel like you have to choose all or nothing. Many plans let you split contributions between Roth and Traditional. This gives you tax diversification in retirement—flexibility to pull money from the most efficient source.

Need Help Building a Retirement Strategy?

Whether you're just getting started or looking to optimize your tax picture, I can help you build a retirement plan that makes sense for your income, your goals, and your legacy.

> Book a free call or download our Income Accelerator Blueprint to get started.

Timothy Cortez