Wouldn't it make more sense to contribute to a ROTH 401(K)?

From what I understand is, as a retiree, your income, and thus tax bracket, can potentially be zero. In this case, investing pre-tax dollars now into a traditional 401(k) will save you money as when you withdraw it, you could be in the 0% tax bracket assuming you have no other income. I'm curious as well what others have to say.

Traditional: Save (insert your tax bracket %) now, withdraw tax free assuming you have no income in retirement. Not sure how investment income will affect this, a year out of school and I start forgetting!

Roth: Pay (insert tax bracket here) now, save nothing in taxes when you retire assuming no income.

There is a school of thought that any opportunity to defer tax is a good one = putting money in a 401(k) or traditional IRA now means you avoid this year's taxes. Balance that against the theory that taxes are inevitably going to rise, which might sway you to instead put in after-tax dollars at today's relatively low rates on the premise that all of that growth will later be tax-free. Of course, you have to think that Congress might just change the rules and you're fucked, regardless of the future tax rate. The better question for you might be whether to utilize your employer's traditional 401(k) program, if it exists. These usually have a matching component - that is free money. You should max out that option before you start talking about any sort of IRAs.

Wow . . . a 100% match means you sink in $5,000 a year and you get $10,000 back. You'll never get that return in the market!

Look at the wikipedia article or talk to an accountant about Roth 401(k) accounts and some of the tax issues pertaining to the employer match. It isn't exactly as clean cut as one might think.

75% of up to 6% salary (so 10% total) for the place I'm going to. Sad that that's a 'good deal' these days...

I actually put in 5% of my salary and my employer puts in 8%. That's a 160% match! You'd better believe I contribute the maximum.

I also contribute to a Roth IRA, but I'm not convinced that my tax rate will be lower in retirement, so I'm not aggressively pursuing the idea of a roll-over Roth IRA (I just changed employers last year and I'm in the process of rolling over a 401(k) into an IRA).

Roth makes a lot of sense if you expect tax rates on normal income to increase in the future, however there are some issues at hand. Taxes on long term capital gains could potentially be higher than normal income taxes if the money you are withdrawling from your 401k at retirement is less than you expect to be withdrawling per year. So it depends on how much you are withdrawling per year at retirement and normal income taxes vs. capital gains tax.

I just do all pre-tax because I enjoy the write-offs. I am not really thinking too hard about retirement because a) I don't really plan on retiring ever and b) inheritence.

Just a note to those enjoying employer contributions to their defined contribution retirement plans: make sure you study the vesting schedule for employer contributions to the plan, it is an easily missed cost of switching employers.

I suppose you could say that I am hedging...I max a roth IRA but make traditional 401k contributions. My employer match only goes into traditional...so if I were to contribute to a roth 401k, I would end up with two 401ks (roth with my money and trad. with employer match).

One thing to consider is that the roth options have an income limit...at some point you will no longer be able to contribute to them if you make above that cap.

Either way...tax advantaged accounts are nice. I can go in and out or hold things like high yielding REITs and not have to worry about the tax issues (REITs don't have to pay corporate income tax but their dividends are not taxed at the dividend rate).

This guy: http://www.iwillteachyoutoberich.com/ has a lot of very good content for people in their early 20s getting a handle on their money. The only problem is the blog is now focused 95% on entrepreneurship so you have to sort of look into the archives for the content (or buy his book, which is good). The posts about setting up automation and sane investing strategies (the kind that don't make good cocktail party talk but provide good long run results) are very good.

Not true. My employer offers a Roth 401k that I max out annually and my annual salary is above the federal income max. Roth IRA, yes, you wont be able to contribute after a certain income. Roth 401k, you can make as much as you want and still contribute.

FWIW, I am also a financial advisor by profession.

Participation is actually required, so I put away 5%, they put in 8%, and then I'm also allowed to contribute to a 403(b), which I do, but not up to the maximum I'm allowed. I hate paying taxes on my earnings, but I do need some money to live on. Depending on the house I buy (I'm currently shopping), I may bump my 403(b) contribution to the max, though. Edit: For all the youngsters on the board, I would advise starting to save for retirement as early as possible. Compounding over time will dramatically reduce the amount you'll need to save when you hit your 30s, 40s and 50s and have other expenses, like kids.