Should you Roth your 401K?

This is really a question that deals with taxation. As you may know, the Tax Cut & Jobs Act of 2017 temporarily lowered tax rates for many Americans. Those cuts are set to expire in 2025 without further Congressional action. Typically the lower your income, the lower your federal income tax liability. As you move up the income scale, your tax liability grows.

Regardless of whether you choose to defer into the Roth portion of your plan or the pre-tax piece or both, you must defer at a high enough rate to insure retirement success. Keep in mind as well that your employer’s contribution will always be on a pre-tax basis so regardless of what you do you will likely have some tax liability in retirement.