Roth 401k Or Traditional 401k - Which Is The Better Investment?

I calculated that if you are doing 15% of your income and you plan on retiring 26+ years you should do roth.

So the answer is "I don't know". Great, thanks for playing! J/K Jarrad, love your vids.

National Debt is over $28,000,000,000,000. Make no mistake. Tax rates will rise for everyone. Its inevitable. Pay taxes now and put your money in Roths.

This is simple math based on tax bracket. Really, it’s your retirement horizon. I was hoping to find guidance.

So how much should I put in 15 percent or 20

I have question, I use my company 401k program and they match 6%. I know they only match with pretax dollars. If I contribute 6% in ROTH 401K, do they match my exact contribution, or do they match 6% of my pretax gross?

Really informative. I am 23 and want to reach FI and want to retire early. My employer offers both options of contributing to my 401K pre-tax or ROTH. I'm still not sure I understand but, would you recommend splitting it 50/50? In this video, you said that if you are trying to reach FIRE then, it might make more sense to do pre-tax. Can you explain that more? or do you have another video that touches on that closely?

Everything I put in trad 401k. Now it’s 3.5 million. So majority of my life I will be in highest tax bracket. I thought I would be lower like most say.

You need to analyze the effects of marginal tax rates when you contribute vs effective tax rates on withdrawals. Also need to consider the potential loss or reduction of AGI based tax credits/deductions into your tax rate if you choose Roth over traditional. For those reasons, I’m 100% traditional. May be different for someone else but tax rates now vs future is too simplistic.

Sitting here at 18 years old like I can’t afford to pay taxes or how to for Roth 401k …

Tax bracket only affect the dollar amounts in those brackets

Great video. My employer lets us do both the roth 401K and traditional 401K. So i actually do both but i put a little more in the traditional 401K to help lower my taxable income every year.

The company match still has to be taxed whats point of roth just to not pay taxes on half of it

ROTH 401K 💸

I have the option for both were i work. I currently put more in the traditional and am steadily increasing my roth contribution.

Jared, am now retired and so thankful I did 30 years of Roth. Tax free is always better than tax deferred and I don't ever have to deal with RMD's. Your vid's are excellent, excellent info!

Hello everyone, what do you recommend if my wife and me have both, Roth 401k's and traditional 401k's but without company matching ?

What about backdoor Roth IRA

Not sure why anyone would want to pay taxes on the growth.

You touched on the unpredictability of where will tax rates be in 10, 20, or even 40 years being key to this choice. You failed to mention the biggest risk with the Roth, will the government honor that 'No tax at withdraw' when the time comes.

Hi Jarrad. I'm currently enrolled in my employers Roth 401k and plan to invest the maximum limit but I just find out that they charge 0.9% for contract asset charges that's on top of the expense ratio of the plan fund I chose (vanguard institutional total stock market index 0.04%). Would it still be smart to maximize my 401k or just invest in taxable account. Also my employer has a discretionary matching so I don't even know how much they'll match or if ever they will match it. I'm over the limit for a Roth IRA so sadly it's not an option and backdoor will probably be regulated soon.

You need to take RMD into account.

Since you don't pay on the gains, your effective tax rate is 0 on that part. If you invest in your 20s your Roth would be 6 times or more what you put into it. That is a lot of money with 0 taxes.

Thanks! This video really helped!

Scrap the stock market completely. Its a total waste of time and money. Get into crypto instead!!

Can i sell roth ira stocks market and withdrawl money?

Roth is the easiest. If you use Roth then you won't have to think about how much you need to withdraw or adjust your lifestyle to meet some tax bracket. With Roth what you see is what you get.

I think the biggest advantage of a Roth 401k is the money grows tax free. So as far as I understand it, I don't have to pay taxes on the interest my money earns. That is a big plus if it's true.

I have both i don’t know if thats good. My wife has traditional roth ira.

For me I determine what tax treatment my investments have based on my income. Since I am a low income earner I feel roth is better than traditional.

I do BOTH cause our match is only allowed on the 401k and not the roth, so I do18% on the 401k and 11% on the roth 401k

I put equal amounts in both but I count the match towards my pretax contribution and let the spillover from over-contributions go to after tax bucket

After all that he reaches the same conclusion that I've had since my employer added the 401K Roth to my company benefits, hedge my bets and invest equally in both.

Why does no one mention what happens to the damn employer match????????? Ugh.

Do traditional then after retirement, move to a state with no income tax.😊

Don't forget to mention the company match in your Roth 401k will go into a regular 401k.

I’m still confused

My question is whether it's more beneficial to put money into one account so that the power of compounding gives you larger end total as opposed to smaller growth in 2 accounts. Anyone did the math on it?

Roth 401K is the clear winner. Pay your taxes upfront, tax free growth, you get 100% of your money after retirement.

You completely neglect the fact that 80%+ of a retirement account value at age 60 is growth.

401k Roth do not pay taxes on that.

So “24%” vs “22%” could not be a worst example.

With a traditional 401k, you save taxes at your marginal tax rate. Then you pay taxes at your effective tax rate in retirement. Even if you move into a high tax bracket in retirement, your effective tax rate is probably lower. Ideally, save some early in your career into a Roth 401k so you can diversify. But mid career, traditional is ideal.

OMG you explained this so well I finally understand! I have watched several vids but yours is by far the best!

Repeat after me peeps. All the math has been done before: employer Match beats Roth beats traditional.

So, max out your employer Match first, then put your money to Roth, then put your money to traditional.


Don't know why most of YT financial "influencers" make it sound complicated with the unknown future income & tax rate.

Trusting the government not to raise tax in the future is like trusting your kid not to eat the cookie left in the open on the table.

Doing nothing because you have analysis paralysis is the worse thing you can do, ask me how I know …

Hi Jarrad. Love the content. I have 2 401Ks. If my older former employer's 401K is much more than $8,000, can't I put ALL of that money, one big lump sum into my very first ROTH inside my very first brokerage account? Is that a ROTH conversion "rollover"? I have a new 401K with my new employer. Both are independent of each other. How can I transfer my ENTIRE 401K balance, from my previous job, entirely into a ROTH? Can somebody out there please advise? And how can I do this with the least amount of fees? Thank you Jarrad!!!

Roth 401k makes sense for those who have their own home and getting some other form of tax credits deductions traditional 401k will give some tax dedications so it shoidl be combination of both

I’ve decided to ditch the IRA and switch to a 401k roth. It’s just easier to invest into it than the IRA, which is important for keeping me on tract, I don’t care about the better investment options of the IRA because I also invest in a separate stock account. I can’t see any benefits that matters to me with using a IRA over a 401kroth.

Can someone explain where I could be wrong?