If you’re a working professional saving for retirement, chances are most of your wealth is tied up in your 401(k). But one of the biggest questions we hear from clients is:
“Should I put money in a Traditional 401(k) or a Roth 401(k)?”
The truth is, both accounts are powerful tools — but the right choice depends on your income, tax situation, and future goals.
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• Contributions: Made with pre-tax dollars
• Taxes: You get a tax deduction today, but every dollar you withdraw in retirement is taxed as ordinary income
• Best for: High earners who expect to be in a lower tax bracket when they retire
• Contributions: Made with after-tax dollars
• Taxes: No tax deduction today, but withdrawals (including growth) are 100% tax-free in retirement
• Best for: Younger professionals or those who expect higher income/taxes in the future
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There’s no one-size-fits-all answer to the Roth vs. Traditional 401(k) debate. The best strategy depends on:
• Your current income and tax bracket
• Expected retirement lifestyle and expenses
• How much flexibility you want in the future
A thoughtful mix of both types of accounts often gives you the most control over your retirement tax picture.
Integra Wealth is a fee-only, fiduciary financial advisory firm located in Cary, NC & Chattanooga, TN.
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