The main difference between a Roth and a regular 401k is the tax treatment. With a regular 401k, the account is pre-tax, which allows all your money to be invested and earn income. Taxes is only taken out at the time of withdrawal.
With a Roth, you pay taxes up front on your contribution. However, there will be no tax at the time of withdrawal. Your earned income from investing the original amount is tax-free.
The choice between a regular account and Roth depends on your tax situations, income level and age. For example, if you have many years until retirement, a Roth can be beneficial because you will get tax-free returns on your investment for many years. Others who expect to be in a lower tax bracket during retirement, however, may want to continue deferring their tax payments until then with a regular 401k.
You can also choose to contribute to both accounts. This way, during retirement, you can choose to withdraw from the pre-tax or after-tax fund, depending on your tax bracket that year.
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