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Generally, what is the most significant determining factor when deciding to invest between a Traditional 401k...

Generally, what is the most significant determining factor when deciding to invest between a Traditional 401k and Roth 401k?

Investments options

Years until retirement

Tax rate during contributions versus tax rate during distribution

Risk aversion
business   finance   
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Answer #1

Traditional 401(k) contributions are pre-tax, meaning that you can deduct your contributions from your current income, and you’ll be taxed on the money you withdraw upon retirement. Roth 401(k) contributions are after-tax, so your deductions won’t impact this year’s tax returns, but you’ll get to withdraw them tax-free on retirement.

Thus the answer is c) Tax rate during contributions versus tax rate during distribution

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