What’s Better: Roth 401k vs Traditional 401k

Traditional 401k or Roth 401k account? With the traditional 401(k), you’ll get an income tax deduction for the amount of money you contributed to the plan; the funds will grow tax deferred right up until retirement, after which you pay income tax as they are withdrawn every year. On a Roth 401(k) account, you won’t get a tax deduction on your contribution, however your money increases tax-free similar to a Roth IRA. The chart below shows how much cash you’ll need to save for retirement and comparison on what’s better: Roth 401k vs Traditional. See also How Retired Americans Rely on Social Security Income and How Does Capital Gains Tax Work.