Understanding Roth 401(k) plans

amount, just as you would with any regular 401(k) withdrawal.

Many people wrestle between Roth and regular 401(k) contributions. A few considerations:

* Will your tax rate be higher now or at retirement? Those in their peak earning years may have a higher marginal tax rate currently than at retirement, whereas those just beginning their careers may see their rates rise over time.

* Many financial experts think future income tax rates will likely climb due to federal budget deficits and increasing demands on Social Security and Medicare.

* The longer you remain invested in a Roth 401(k), the more likely you are to benefit from tax-free account growth.

* Consider where you'll retire, as many states have low or non-existent income tax.

When it's not clear which type of 401(k) – or IRA – is best for their particular situation, some people diversify their retirement savings by contributing to both a Roth and a regular 401(k).