Traditional versus Roth 401K

Investing
#1

Hey Jeremy, I believe in other posts I’ve seen you recommend the Roth option versus traditional for 401K. Can you elaborate on why? And do you believe that going with the traditional option is a bad option, or it is just a matter of preference? I’m currently contributing 20% pre-tax to a traditional 401K but am re-thinking my strategy now.

Thanks for all that you do!

-Tommy

#2

Both are great options and the difference is a matter of fine tuning, won’t massively impact your wealth one way or the other, and impossible to know without knowledge of the future which one will serve you best. So broad strokes, just pick one and go with it.

Here’s a post on what I like about the Roth version:

Reasons I might go with Traditional:

  • You’re a high income earner and/or you’re near retirement so it’s very likely the tax break now will be better than the tax break in retirement
  • You’re planning on retiring early and doing a “Roth IRA ladder”
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#3

Thanks for the in-depth response as always Jeremy!

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