Roth or traditional: pay tax now or later?

Both Roth and traditional accounts help you save for retirement. The difference is when you pay income tax.

The basic trade-off

• Traditional: tax break now, pay tax on withdrawals later
• Roth: pay tax now, qualified withdrawals later are tax-free

People often lean Roth when

• They're early in their career with a lower tax rate
• They expect a higher income later

People often lean traditional when

• They're in a higher tax bracket now
• They expect lower income in retirement

Many split it

Because no one knows future tax rates, some people use both. A tax professional can help with your own situation.

General education only, not tax advice. Nickel Gains isn't paid by any broker, fund company or adviser.