3 Reasons to Choose a Traditional 401(k) Over a Roth 401(k)
Choosing between a traditional 401(k) and a Roth 401(k) can be difficult, since you may not be sure what your tax rate will be in retirement relative to when you're working. Those who opt for the traditional, pre-tax variety implicitly believe their tax rate will fall in retirement; on the flip side, Roth 401(k) retirees get their tax bill out of the way up front and ultimately pay no tax on future portfolio withdrawals.
Still, there are many reasons one might choose a traditional 401(k).
The traditional 401(k) allows you to defer taxes now, accumulate investment value, and pay federal tax later on any withdrawals in retirement. Many states (though not all) offer deductions on traditional 401(k) contributions for state income tax purposes as well. This can have a lot of value if you have your eyes set on a state like Texas or Florida (among others) that levies no state income tax. This is particularly true if you currently live and work in an area that has high state income tax rates and/or local income taxes. You could not reap state tax savings on any retirement contributions, but also end up never paying state income taxes at all if you relocate to a no-income-tax state for retirement.
Source Fool.com
