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Roth over traditional every time because you never know what can happen. Eventually the US is going to have to increase taxes. With Roth what you see is what you get unless they change the rules
But you can only do a Roth 401k if your employer offers it, is that right?
Correct
If you’re maxing out, Roth allows you to save more in tax favored accounts. Example: 25 percent tax rate. If doing regular 401k, you put in 22500, save 4625 in tax now. Say it doubles to 45000 before distribution so you pay 11250 in taxes on distribution so you end up with 45000 plus 4625 saved minus 11250 in taxes due so 38375 after taxes accounted for. If Roth, you don’t get tax deduction so it costs you 4625 on the front end. However when you distribute, no tax so you get your entire 45000. Subtracting out the 4625 it cost to do Roth, you have 40375, so it’s a better result. If you’re not maxing, Roth and regular are same if tax rates stay same.
Agreed your point if you are maxing out all other tax advantaged account, Roth lets you do somewhat more.
For folks who might already have a large amount in traditional, or otherwise expecting a significant income in retirement agreed this is a benefit.
There's also a psychological argument in favor of utilizing the Roth. We rarely factor in the tax deduction to our savings rates adjusting up or down to reflect the same current after tax impact to our paycheck
I've seen plenty of studies adjust the current savings rates to reflect the same after tax contribution amount but in reality most employees just choose x% they don't say I want to save 10% but since I get a current tax deduction I'm going to save 13.8% based on my 28% tax bracket creating a 10% difference in my paycheck.
So if you just save 10% either way you wind up with far more spendable money in retirement.
But less spending money pre-retirement.
Of course most people probably should have more, but probably they aren’t on this forum.
Rising Star
For most people Roth is a mistake. People don’t consider that our tax system is tiered and that in retirement some of those withdrawals from your traditional 401k are taxed at a very low rate. You can pull out around $400k/year and still have an average tax rate of around 23%. Alternatively, your traditional 401k contributions come off the top at your marginal tax rate. Tax rates on people earning under $400k would have to increase by 50% (I.e., from 20% to 30%) before Roth would be better for most people.