Originally Posted by
BoilerUP
I had the same question recently, and it was basically explained to me like this:
You shelter $18.5k from tax liability today via 401k, and it grows (for round numbers) to $200k...and you'll pay tax on the entire $200k as you make distributions from the account.
If you pay tax on the same $18.5k today and invest it via Roth 401k, and it grows to $200k...all you'll ever pay tax on is the initial $18.5k.
In "dumb pilot/round numbers" speak...35% of $18.5k is a LOT less than 25% of $200k.
I re-read this and it makes a lot more sense. Good short explanation. Thanks