<prompt> Human: Trying to understand whether I should contribute to a Roth or Traditional 401k, and Id like help clarifying my understanding of how each account is taxed. I use contributions to refer to the amount of money from my paycheck I will put in the account, and earnings to refer to the money I will get from the growth of my investment.With a Traditional 401k Contributions are not taxed Earnings are not taxed while I keep working When I retire and withdraw my funds contributions earnings, those are taxed according to my incomeWith a Roth 401k Contributions are taxed Earnings are not taxed while I keep working When I retire and withdraw my funds contributions earnings, those are not taxed at allIs that correct? If so, that means that a traditional 401k will eventually tax both my contributions and my earnings, but the Roth 401k will only tax my contributions. Given that the earnings could represent as much as 80 of the total retirement balance, seems that the Traditional 401k ultimately ends up losing a lot more to taxes.Please help me understand if I have misunderstood anything.  <response>: You are effectively correct. But Im not sure you understand how the tax brackets come into play. Roth IRA may not be slam dunk you think it is. It really depends on your current tax responsibilities versus your expected responsibilities at retirement. Remember your income at retirement will likely be lower, thus putting you in a lower tax bracket.For most young people, Roth is almost always the best option. As you age and advance in your career, traditional IRAs start to make more sense.But it is a balancing act. You have to try to gauge your tax responsibilities now vs later, and in many ways it is a guessing game---Im in my early 30s and had a 8020, RothTraditional contribution split up until this most recent tax law passed. Ive since switched to 100 Roth starting in 2018.The reason why is simple: taxes are low right now, infrastructure is crumbling, healthcare costs are going up, and the country is 21 trillion in debt. There is a very good chance taxes will go up in the future, so I might as well pay taxes up front.I obviously have no idea what the future will hold, so I could be completely wrong. But thats the sort of balancing act that goes through my head when I try to figure this stuff out. 