If you already contribute pre-tax dollars to a traditional 401(k) plan or IRA, you may also want to contribute to a Roth version. You’ll forgo tax savings now because Roth contributions are made with after-tax dollars. But diversifying retirement contributions across account types can help lower income tax bills later. That’s because you’ll owe tax on distributions from traditional plans, but generally won’t on distributions from Roth accounts.
A Roth account can save taxes over your lifetime if tax rates rise between now and when you retire or your income in retirement is higher than it was when you worked, pushing you into a higher tax bracket. Contact the office to help determine whether this strategy makes sense for you.