@ramseyinvesting: Traditional 401(k): Pay taxes later (when you withdraw in retirement) Roth 401(k): Pay taxes now (on the money before it goes in) Let’s take a look at the pros and cons of each setup... Traditional 401(k) Pros: - Lowers your taxable income today (you pay less in taxes right now) - Good if you genuinely expect to be in a lower tax bracket in retirement Traditional 401(k) Cons: - Every dollar you withdraw in retirement is taxed as income - You don't know what tax rates will be in 20-30 years - Required Minimum Distributions (RMDs) at age 73 = the government forces you to withdraw whether you want to or not Roth 401(k) Pros: - All growth is completely tax-free - Withdrawals in retirement are tax-free - No RMDs = your money keeps growing as long as you want - You know exactly what you're paying now; no tax surprises later Roth 401(k) Cons: - No tax break today = your paycheck feels slightly smaller - Not all employers offer a Roth 401(k) option When in doubt, go for the Roth. If your employer doesn't offer a Roth 401(k), the best move is to contribute to the traditional 401(k) only enough to get the full employer match, then open a Roth IRA and invest there first before putting any more into the traditional 401(k). #retirement #investingforbeginners #investing101 #moneytok

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Thursday 24 September 2026 17:40:00 GMT