The rule of thumb is wrong about half the time
The popular advice is "Roth if you're young, traditional if you're older". It is not quite right. The real variable is your marginal rate now vs. your marginal rate in retirement. If you expect to retire in a lower bracket than today, pretax wins; if higher, Roth wins; if equal, the after-tax dollars at the end of 30 years are mathematically identical (setting aside RMDs and Medicare IRMAA).
A quick sanity check
A single filer earning $85,000 in 2026 is in the 22% federal bracket. That person's first $15,750 of income is covered by the standard deduction — zero tax. So their *effective* average rate is around 13%. In retirement, if they withdraw $60,000 a year from a traditional 401(k) and apply the 2026 standard deduction, their effective rate lands near 9–10%. That means traditional wins by roughly four percentage points of annual tax, compounded.
Flip the person: a 28-year-old earning $55,000 in the 12% bracket, expecting a career that peaks in the 24% bracket and a retirement with a paid-off house plus Social Security — Roth wins, plain and simple. Lock in 12% now.
The 24% bracket trap
Many readers are in the 24% bracket and genuinely can't predict their future rate. In that case, split. Put your 401(k) in traditional (for the guaranteed deduction), your Roth IRA in Roth (since it's your only route to Roth diversification for many high earners), and your HSA in pretax (because it turns into a stealth traditional IRA at 65). Three buckets, three tax treatments, total flexibility.
The Roth catch-up twist for 2026
Starting in 2026, if your prior-year Social Security wages exceeded $150,000, your catch-up must be Roth. You don't get to decide. For workers 50+ in high brackets, this is a built-in Roth push. Plan your total contribution mix accordingly.
Quick decision tree
- Expect higher future bracket → Roth.
- Expect lower future bracket → Traditional.
- Don't know → split 50/50.
- High earner age 50+ → at least the catch-up is Roth by law.
- Self-employed → Solo 401(k) Roth beats a SEP-IRA for flexibility.
For concrete numbers, run your situation through our 2026 contribution limits planner. And if you want a deeper dive on the tax math, see our glossary entry on Modified Adjusted Gross Income.