A Roth 401(k) is funded with after tax dollars, so it does not save tax due now. Any benefit is realized when you begin qualified withdrawals as the Code provides.
I believe it is almost always best to defer tax by using a traditional 401(k). If you run the numbers you will see that reducing your income by a $15,000 contribution will result in a significant tax saving, and will thereby reduce your quarterly tax payments also since your income for the tax year is lower.
An advantage of the Roth IRA, but not the Roth 401(k), is that the original owner is not required to take distributions (beneficiaries after the death of the owner do). Tax laws are always subject to change, and it is always possible that Congress will find ways to change the Roth IRA rules to require owners to take distributions which will not be taxed as income, but will leave less for your beneficiaries in the plan. |
