Do you have the Roth 401(k) option available to you?  If so, it may be worth looking into.  The following table compares the features of a Roth 401(k) to those of a traditional 401(k).

Traditional 401(k)Roth 401(k)
Annual contribution limit$16,500 ($22,000 for participants age 50 and above)$16,500 ($22,000 for participants age 50 and above)
Matching contributionsAllowed. May be combined with employee contributionsDeposited separately in a Traditional 401(k) account. Taxed when withdrawn
Tax status – employee contributionsMade with pre-tax dollars; deductible from current incomeMade with after-tax dollars; not deductible from current income
Tax status – withdrawals after age 59½Taxable as ordinary incomeNot taxable
Mandatory withdrawalsRequired minimum distributions start at age 70½Required minimum distributions start at age 70½
Best for


Employees who need the current tax deduction, who will make withdrawals within five years, or who will be in same or lower tax bracket in retirementEmployees who do not need the current tax deduction, who will not make withdrawals for five years or more, or who will be in higher tax bracket in retirement
ConcernsAll growth in the account, including capital gains on equity investments that would qualify for favorable capital-gains treatment if earned outside a retirement account, are taxed at ordinary income ratesIf tax rates decline, early payment of taxes will have been counter-productive; requires giving up more current income to maximize employer match