Pre-Tax vs. Roth Contributions: Understanding Your Options
Choosing how to contribute to your retirement plan can affect both your savings and your taxes. Whether you prefer the immediate tax advantages of pre-tax contributions or the potential for tax-free withdrawals with Roth contributions, understanding the differences can help you make more informed decisions. In this 2-minute video, you’ll explore the key features of each approach and learn why some savers use a combination of both as their needs evolve over time. View the Spanish version here.
| Visual | Audio |
|---|---|
| Fisher\SMB logo in blue with an orange diagonal accent, centered on a light gray background. | NA |
| Text on screen reads, ‘Your retirement plan is about more than saving for the future.’ Beside the text, an illustrated person stands in front of a piggy bank and shield, holding a large check mark that extends upward across the image. | Your retirement plan is about more than saving for the future. |
| Text on screen reads, ‘It can also play a role in your overall tax strategy.’ Beside the text, an illustrated person stands in front of a piggy bank and shield, holding a large check mark that extends upward across the image. | It can also play a role in your overall tax strategy. |
| Text on screen reads, ‘Most plans let you make both pre-tax and after-tax contributions,’ with ‘pre-tax’ and ‘after-tax’ emphasized in bold. An orange diagonal accent appears beside the text. | Most plans let you make both pre-tax and post-tax contributions, |
| Text on screen reads, ‘Each approach offers very different tax benefits.’ An orange diagonal accent appears beside the text. | but each approach offers very different tax benefits. |
| Two piggy banks labeled ‘Traditional’ and ‘Roth’ appear side by side. An illustrated person stands between them, inserting coins into each piggy bank. | Understanding the two contribution types can help you create more flexibility in how and when you pay taxes over your lifetime. |
| Title card displays the text, ‘What’s The Difference: Pre-Tax (Traditional),’ with ‘Pre-Tax (Traditional)’ emphasized in bold. | With pre-tax contributions, the money is taken out of your paycheck before taxes are calculated. |
| Text on screen reads, ‘What’s The Difference: Pre-Tax (Traditional),’ followed by the bullet points ‘Defer taxes now’ and ‘Pay taxes on withdrawals.’ Beside the text, an illustrated person stands among financial documents, a calendar, calculator, and currency icons while reviewing a tablet. | Meaning you don’t pay taxes now or while your savings are invested, but you will pay taxes on your income when you make withdrawals during retirement. |
| Title card displays the text, ‘What’s The Difference: After-Tax (Roth),’ with ‘After-Tax (Roth)’ emphasized in bold. | On the flip side, contributions to an after -tax, or Roth, account are made with money that has already been taxed. |
| Text on screen reads, ‘What’s The Difference: After-Tax (Roth),’ followed by the bullet points ‘Pay taxes now’ and ‘Avoid taxes on withdrawals & gains.’ Beside the text, an illustrated person stands in front of a piggy bank while holding a shield and a large check mark. | Which means that qualified withdrawals from your Roth account are generally tax-free. That includes any investment gains your money earns over time. |
| Text on screen reads, ‘How do you choose between the two?’ on a light blue background. | So how do you choose between the two? |
| Text on screen reads, ‘Many people prefer to pay taxes when they’re in a lower tax bracket,’ on a light blue background. | In general, many people prefer to pay taxes when they’re in a lower tax bracket. |
| An illustrated person stacks and arranges large piles of dollar bills. The stacks increase in height, forming steps of growing savings on a light blue background. | If you think you’ll be in a higher tax bracket in retirement than you are today, Roth contributions may make sense. |
| An illustrated person climbs a ladder and inserts coins into a large savings jar. A stack of coins is visible at the bottom of the jar and grows as additional coins are added. | On the other hand, pre-tax contributions will lower your taxes. If you’re in a high tax bracket today, lowering your tax bill may be more important to you. |
| Text on screen reads, ‘Your time horizon can also play a role.’ An orange diagonal accent appears beside the text. | Your time horizon can also play a role. |
| Text on screen reads, ‘If you’re close to retirement, you may have less time for Roth dollars to grow.’ An orange diagonal accent appears beside the text. | For instance, if you’re getting close to retirement, you may have less time for Roth dollars to grow, |
| Text on screen reads, ‘You may lean toward pre-tax contributions.’ An orange diagonal accent appears beside the text. | so you may lean toward pre-tax contributions. |
| Two piggy banks labeled ‘Traditional’ and ‘Roth’ appear side by side. An illustrated person stands between them, inserting coins into each piggy bank. | Fortunately, this isn’t an either-or question. Many people use a mix of both approaches because it gives them flexibility. |
| An illustrated hand positions a blue section onto a circular pie chart divided into multiple colored segments, representing the process of building or balancing a diversified portfolio. | No matter your income or tax situation today, no one can predict the future. That’s why keeping your options open can be valuable. |
| Text on screen reads, ‘Some people adjust their mix based on their income.’ As the text remains on screen, the word ‘income’ changes to ‘tax situation’ and then to ‘time horizon.’ An orange diagonal accent appears beside the text. | Some people adjust their mix over time as their income, tax situation, and retirement horizon change. |
| Text on screen reads, ‘Understanding these tax scenarios on your own can be tricky,’ with ‘on your own can be tricky’ emphasized in bold. An orange diagonal accent appears beside the text. | Understanding these different tax scenarios on your own can be tricky. That’s where Fisher\SMB can help. |
| Fisher\ SMB logo centered on a light background, with a blue banner below displaying the phone number (888) 322 7586 and email contact401k@frs.net, each accompanied by small phone and envelope icons. | Our retirement specialists can talk you through your situation and discuss how pre-tax and Roth approaches fit into your long-term strategy. Contact us today. |
| A navy blue screen with the disclosure “Investing in securities involves the risk of loss. Fisher Retirement Solutions®, Fisher\SMB™, FisherSMB™, and all related logos and designs are trademarks of FisherSMB Enterprises, LLC. ©2026 FisherSMB Enterprises, LLC. K092607VV” | NA |