Quick answer: The central difference is generally tax timing: traditional 401(k) employee contributions are commonly made pre-tax for federal income-tax purposes, while designated Roth contributions are made after tax, with qualified Roth distributions subject to applicable rules.
Traditional 401(k)
Traditional salary deferrals can reduce current taxable income for federal income-tax purposes, while distributions are generally taxable later. Other payroll taxes and state rules can differ.
Roth 401(k)
Roth contributions do not provide the same current federal income-tax deferral, but qualified distributions can be tax-free when requirements are met.
Questions that matter
Consider current and future tax circumstances, plan investment choices and fees, employer match rules, cash flow, and whether splitting contributions is allowed and useful. Tax law changes, so verify current IRS rules.
Next steps
Read how employer matching works, the 401(k) term guide, and use the 401(k) Calculator.
Methodology and limitations
This guide explains general financial concepts and decision factors rather than prescribing one answer. Product terms, tax treatment, credit practices, rates, and laws can change. Verify current rules with the relevant financial institution, plan administrator, or government source before acting.
Reviewed September 26, 2026. General financial education only; not individualized financial, tax, legal, investment, or credit advice.