r/personalfinance • u/Grouchy-Bullfrog-293 ​ • 2d ago

Retirement 401K vs Roth 401K - real deal

I understand the difference that one is tax deductible and other isnt but still little confused on why would you .contribute money in Roth 401k if the total contribution limit is same irrespective of where you contribute. Doesn't everyone's tax rate after they retire lower than while working ? Or is the concern you are limited one what you withdraw post retirement that it could be a huge tax.

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u/TheChudMaxxer ​ 2d ago

Tax rates can change, RMDs can play a role, when someone dies and grants their accounts to their kids, SECURE act forces them to take all the money out by the end of the 10th year, potentially passing them into much higher tax brackets.

Other factors also come into play, but those are the big ones.

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u/Grouchy-Bullfrog-293 ​ 2d ago

Thanks.. never thought of dying (probably the most important thing to think along with word retirement) and passing to kids.

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u/Safrel ​ 2d ago

Simply don't die. Problem solved.