Recent graduate with new job: Choose Roth 401(k), or traditional 401(k)?
I'm just a few years out of college, and am starting to put aside some retirement savings. My employer offers both traditional and roth 401(k) options, but I'm having a hard time deciding which would be more beneficial for me.
I see that the benefit of the Roth plan is tax-free withdrawals, so any money earned would essentially be tax-free. Also, since tax rates are relatively low compared to history and my income is presumably less now than it will be in the future (currently 25% tax bracket), I may pay a lower rate now than I would in the future. On the other hand, I'd be contributing less than with a traditional plan since it is taxed before being invested. Is there a general sentiment about which is preferable, or some way I can make an objective assessment?
The plans are identical save for the pre-tax/post-tax contribution difference (in both cases the employer has a 100% match up to 6%). Assume I will not hit the annual contribution cap.