So I'm starting a new job in a few weeks, and the company offers both a traditional, pre-tax 401(k) option and a Roth 401(k) option. The overall IRS contribution limit is the max total contribution, and it can be split any way the employee wants between the two options.
Obviously, in a traditional 401(k), contributions are not taxed, but withdrawals are taxable. Any contributions to the Roth 401(k) would be taxed first, and would thus lower take home pay, but then withdrawals would never be taxed.
In the past, I have always attempted to contribute the maximum amount (up to the IRS limit) to a traditional 401(k). Then in some years, I made an additional contribution to a Roth IRA. But there was no real choice to be made there. All of my 401(k) contributions had to go into a traditional IRA, meaning all other income that I had to consider contributing to an IRA had already been taxed.
Here, if I go the Roth 401(k) route, my contributions will be made after federal, state, Social Security, and Medicare taxes have been taken out.
I'm leaning towards putting all of my contribution into the Roth 401(k). Just wondering if anyone has experience with this decision and can articulate any pros and cons I haven't addressed.