Roth options have become a common choice in many 401(k) plans, as well as 403(b) and 457 plans. The appeal with a Roth plan is the potential tax savings when distributions are made in retirement years. Money that goes into a Roth plan today is taxed today, but all earnings and future qualified distributions are free of tax.
With traditional 401(k) plans, money goes in tax-free (and all future growth is free from tax), but qualified distributions are taxed at ordinary income rates.
Check out AARP’s calculator at https://www.aarp.org/work/retirement-planning/roth_vs_traditional_401k_calculator.html to help determine which option might be right for you — and how it could affect your paycheck.
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This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
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