What's the difference between Roth and Traditional 401K options?

The basic difference between a traditional and a Roth 401(k) is when you will pay the taxes on your money. With a traditional 401(k), you make contributions with pre-tax dollars, meaning the money going towards your 401(K) has never been taxed. That gives you a tax break up front, helping to lower your current income tax bill now. You will then be required to pay taxes when you withdraw your funds.

With a Roth 401(k), it's basically the reverse. You make your contributions with after-tax dollars, meaning the money you are putting into the 401(K) has already been taxed. There is no upfront tax deduction benefit, however, withdrawals of both contributions and earnings are tax-free once you reach age 59½, as long as you've held the account for five years.