Pre-Tax vs. Roth Contributions: What’s Best for You?
Updated: July 20th, 2026
Takeaways
- The real question isn’t your age — it’s your tax rate today versus your expected tax rate when you withdraw the money
- Pre-tax contributions lower your taxable income now, but the full withdrawal (contribution plus decades of growth) is taxed as ordinary income later
- Roth contributions are taxed today, but qualified withdrawals — including all future growth — come out tax-free
- You don’t have to pick one: contribution strategy can split between both, and can change from year to year as your income changes
- Holding assets in pre-tax, Roth, and taxable accounts gives you flexibility to manage taxable income in retirement — that flexibility is the real value of tax diversification
I get this question all the time: “Should I be contributing to pre-tax or Roth?” Usually, people are expecting a one-word answer. Roth. Pre-tax. Just tell me which box to check. Unfortunately, like most things in financial planning, there is no universally “better” option. And despite what you may have heard, this is not simply a question of how old you are. The better question is: What is your tax rate today, and what do we reasonably expect your tax rate to look like when you eventually withdraw the money? That is really the decision you are making. Do you want the tax benefit now, or do you want the tax benefit later?
Once you understand that, the pre-tax versus Roth conversation becomes much easier.
What are pre-tax contributions?
When you make a pre-tax contribution to a 401(k) or 403(b), the money goes into your retirement account before income taxes are applied to your paycheck. The immediate benefit is that your taxable income is reduced, which may lower your tax bill today.
For example, let’s say you earn $100,000 and contribute $10,000 to your 401(k) pre-tax. In a simplified example, instead of paying income taxes on $100,000 of income, you are now paying taxes on $90,000.
Great. You received a tax benefit today. But the IRS did not forget about that money.
You deferred the taxes. Your $10,000 gets invested and, hopefully, grows for many years. When you eventually withdraw money from the account in retirement, those distributions are generally taxed as ordinary income.
This is an important distinction because you are not simply paying taxes later on the original $10,000 contribution. You are paying taxes on the dollars you eventually withdraw after years, or even decades, of potential growth.
What are Roth contributions?
Roth contributions flip the tax decision.
Using the same example, let’s say you earn $100,000 and contribute $10,000 to a Roth account. You do not receive a tax deduction for the contribution today. You pay income taxes on those dollars now and then invest the money.
The trade-off is that, assuming you meet the requirements for a qualified distribution, the money can grow tax-free and be withdrawn tax-free in retirement. That includes both your original contributions and the growth on those contributions.
It usually comes down to this: would you rather pay taxes at your tax rate today, or at whatever your tax rate turns out to be later?
Why “young people should always do Roth” is incomplete advice
You have probably heard some version of this advice before: “If you’re young, contribute to Roth.”
The logic makes sense. Younger people are often earlier in their careers, earning less money and paying taxes at lower marginal rates. If you can pay taxes at a relatively low rate today and allow those dollars to grow tax-free for decades, Roth can be very attractive.
The problem is that “often” is doing a lot of work in that explanation.
Consider a 28-year-old working in tech and earning $300,000 a year. Now compare that person with a 50-year-old earning $65,000 who expects to have significant pension and rental income in retirement. The younger person may actually be in a much higher tax bracket today.
Age is sometimes used as a shortcut for income and tax rate, but it is not the same thing.
When I think about the pre-tax versus Roth decision, I care much less about how old you are than I do about what your income looks like today, where your marginal tax rate sits, what assets you are accumulating, and what we reasonably expect your income to look like in retirement.
That’s the actual planning conversation — not the birthday on your license.
You don’t have to pick a team
One of the most overlooked parts of the pre-tax versus Roth conversation is that you do not necessarily have to choose one or the other.
This is not Team Roth versus Team Pre-Tax.
Depending on your retirement plan, you may be able to split your contributions between both. You can also revisit the decision annually. Maybe Roth makes sense this year. Then you receive a significant promotion, your income increases, and pre-tax contributions become more attractive next year.
Or perhaps you retire at 62 and do not yet need to take large distributions from your retirement accounts. You may suddenly have a period of lower-income years before required minimum distributions begin, creating an opportunity to evaluate Roth conversions.
Your financial life changes. Your tax strategy should be allowed to change with it.
Why tax diversification matters in retirement
Imagine reaching retirement and having every dollar you saved sitting in a pre-tax retirement account. You need $100,000 for a major expense, so you take a distribution. That withdrawal may increase your taxable income and potentially affect other parts of your tax picture.
Now imagine you enter retirement with assets in pre-tax retirement accounts, Roth accounts, and taxable investment accounts. You have options.
That is the value of tax diversification: flexibility.
In a lower-income year, it may make sense to take additional distributions from a pre-tax account and recognize the income. In a higher-income year, qualified Roth withdrawals may provide another source of funds without adding taxable income.
The goal is not to perfectly predict tax rates 20 or 30 years from now. I certainly can’t. The goal is to give your future self choices.
When Roth conversions may create a planning opportunity
If you spent most of your career contributing to a traditional, pre-tax 401(k), that does not mean the Roth conversation is over.
A Roth conversion allows you to move money from a pre-tax retirement account into a Roth account. You generally recognize taxable income on the amount converted today, but the converted assets can then potentially grow tax-free and be withdrawn tax-free if the applicable requirements are met.
The key word here is planning.
When evaluating a Roth conversion, I am not simply asking, “Can we convert this money?” I am asking, “Does it make sense to intentionally recognize this income this year?”
Maybe you recently retired, and your income dropped. Maybe you are between jobs. Maybe you have unusually large deductions. Or perhaps you are in the years between retirement and the start of required minimum distributions.
Those are the moments when tax planning gets interesting.
A Roth conversion shouldn’t happen just because someone on TikTok said Roth accounts are better — the tax bill, timing, and the rest of your financial picture all matter more than the trend.
Your withdrawal strategy matters, too
We spend decades talking about how to put money into retirement accounts. Then people retire and realize no one ever explained how to take it back out.
Where you pull money from can affect your taxable income, and your taxable income can affect your marginal tax rate. It can also interact with other parts of your financial life, including Medicare premiums and the taxation of Social Security benefits.
Retirement planning isn’t finished once you hit a number. $3 million saved still leaves the real question open: where is it sitting? Is it in pre-tax retirement accounts? Roth accounts? Taxable investments? Real estate?
The answer can significantly change the planning opportunities available to you in retirement.
What about leaving retirement accounts to your heirs?
Legacy planning is another factor that can influence the pre-tax versus Roth conversation.
Generally, qualified Roth distributions are tax-free. If Roth assets eventually pass to your heirs, the income tax treatment can be very different from inherited pre-tax retirement accounts. Traditional retirement accounts generally carry an income tax obligation when beneficiaries take distributions.
That does not automatically make Roth “better.” But if leaving assets to your children or other beneficiaries is an important part of your financial plan, the tax characteristics of those assets are worth considering.
Don’t forget about after-tax contributions and the mega backdoor Roth
Some employer retirement plans offer a third contribution option: after-tax contributions. These are different from Roth contributions and are not available in every plan.
For certain high earners who have already maximized other retirement savings opportunities, after-tax contributions may create an additional Roth planning opportunity. If the employer plan allows the appropriate features, after-tax dollars may be converted to Roth through an in-plan Roth conversion or similar strategy. This is commonly referred to as a mega backdoor Roth.
Yes, the name sounds ridiculous. No, I did not name it. This is different from a regular backdoor Roth strategy, which uses non-deductible IRA contributions rather than employer plan features — similar goal, different mechanics.
Your employer plan has to allow the appropriate contribution and conversion features, so this is one of those rare occasions when reading your 401(k) plan document may actually be worth it. I know. Riveting.
Frequently Asked Questions
Is Roth always the right choice for young people?
Not necessarily. Age is often used as a shortcut for “lower tax bracket,” but income matters more than age. A 28-year-old earning $300,000 may be in a higher bracket than a 50-year-old earning $65,000. The better question is what your tax rate looks like today versus what you’d reasonably expect it to be when you withdraw the money.
Can I contribute to both pre-tax and Roth accounts?
In many employer plans, yes — you can split contributions between pre-tax and Roth, and you can revisit that split every year as your income and circumstances change.
What is a mega backdoor Roth?
It’s a strategy that lets certain high earners convert after-tax 401(k) contributions to Roth through an in-plan conversion, on top of regular pre-tax or Roth contribution limits. It requires your specific employer plan to allow both after-tax contributions and in-plan conversions — check your plan document to confirm it’s available to you.
When does a Roth conversion make the most sense?
Generally, in years when your taxable income is temporarily lower than usual — for example, right after retiring, between jobs, or in the years before required minimum distributions begin. A conversion recognizes taxable income in the year it happens, so the decision depends on your full tax picture, not just the idea that Roth is generally favorable.
So, pre-tax or Roth?
If you are in a high tax bracket today and reasonably expect to be in a lower tax bracket when you withdraw the money, pre-tax contributions may be attractive. If you are paying taxes at a relatively lower rate today and expect your income or tax rates to be higher in the future, Roth may be worth considering.
For many people, however, the answer is not one or the other. It may be some combination of both.
More importantly, the answer can change.
Your income, your family situation, the tax code, your career — all of it will shift. The retirement timeline you’re picturing today may not be the one you’re living in five years. The contribution strategy that makes sense today may not be the same strategy that makes sense five years from now.
So instead of asking, “Which account is best?” consider asking a different question:
“Based on what we know today, when do I want to pay the tax?”
That is a much better place to start.
At Brighton Jones, we look at decisions like pre-tax versus Roth in the context of your entire financial picture, including your income, tax rate, investments, retirement timeline, and long-term goals. Because the right answer is rarely about checking a box once and forgetting about it. Sometimes, the planning is in knowing when to change the box.
About the Author: Celia Meagher is a financial planner at Brighton Jones who works with clients on pre-tax and Roth contribution strategy, Roth conversions, and retirement withdrawal planning as part of the firm’s Personal CFO approach to integrated wealth management.
Disclosure: This content is for informational and educational purposes only and should not be construed as individualized advice. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. For individualized advice tailored to your specific circumstances, please consult with the professional advisor of your choosing.
