Choosing between pre-tax and Roth 401(k) plans can be much trickier than you think

Choosing between pre-tax and Roth 401(k) plans can be much trickier than you think  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  VIEW IN BROWSER | SUBSCRIBE WED, JUN 01, 2022 YOUR WEALTH Editor's Note Do you know the difference between a pre-tax 401(k) deposit and a Roth 401(k) contribution? If you are currently employed or changing jobs, you may need to make a choice between the two. And making the smart call can be tricky, according to financial experts. CNBC's Kate Dore reports on the differences. Pre-tax 401(k) deposits reduce your adjusted gross income, and the money grows tax-deferred, meaning you'll pay taxes on any withdrawals. On the flip side, Roth 401(k) contributions don't provide an upfront tax write-off, but earnings are tax-free. However, there may be other tax trade-offs, so you'll need to weigh the pros and cons before diverting funds. If you anticipate you will have more income or higher taxes in retirement, tax-free withdrawals from Roth contributions may make sense. Meanwhile, tax-deferred contributions may be better if you expect lower earnings and taxes, financial experts say. Still, some experts say you may also consider creating a mix of pre-tax and after-tax funds from a diversification standpoint. While this may seem a bit overwhelming, take your time and do your research. It's also a good idea to seek assistance from a financial professional. As always, before you make any big decision, sit down and take an honest look at your entire financial situation. Evaluate your comfort zone, figure out your life goals and risk tolerance, and this will help you make the right decision that aligns with your specific needs. For more cool stuff like this, be sure to visit CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. Jim Pavia Money Editor @JIMPAVIA Choosing between pre-tax and Roth 401(k) plans can be much trickier than you think Is it better to make pre-tax or Roth 401(k) contributions? Here's how to decide which is best for your retirement savings. 25% of Americans are delaying retirement due to inflation, survey finds Due to high inflation, one-quarter of Americans will have to delay their retirement, according to the BMO Real Financial Progress Index. Feeling behind on retirement savings? These tips can help you make up for lost time Saving for retirement may seem like a daunting goal. But moves you make to save more now can help you live more comfortably later on. A market bottom is an elusive target. These are the moves Merrill advises clients to make now If inflation peaks and earnings are strong heading toward 2023, it could be enough to boost investor confidence. House hunting? Here's when to increase your budget and when to stick to your original price In February, the median sales price for homes in the U.S. was $357,300, a 15% increase on the year, according to the National Association of Realtors. Medicare Part B premium reduction won't happen this year Medicare officials have determined that a mid-year change is not feasible, despite significant cost savings related to coverage of Alzheimer's drug Aduhelm. Your Social Security check might be taxed. Here's how that could change It may come as a surprise that your Social Security income may be taxed. Here's how those levies work, and how Congress may change them with future reform. Fraud had 'significant' role in $163 billion leak from pandemic-era unemployment system Higher benefits and administrative issues made pandemic-era unemployment programs a rich target for criminals, according to a U.S. Department of Labor report. Here's what you need to know about reverse mortgages With markets volatile and housing hot, reverse mortgages are attractive to retirees looking for cash while staying in their homes. Why is it getting dumber? "Carleton English, Rishi Khanna, Michael Batnick and Downtown Josh Brown discuss the economic outlook, the state of retail trading, the favorite stocks of hedge funds, new home sales, and much more ..." CONTRIBUTORS Sharon Epperson @sharon_epperson Josh Brown @ReformedBroker Unsubscribe Manage Newsletters Terms of Service Join the CNBC Panel   Digital Products Feedback Privacy Policy CNBC Events   © 2022 CNBC LLC. All rights reserved. A property of NBCUniversal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes and Market Data and Analysis. Data also provided by THOMSON REUTERS