Both grow tax-deferred. That implies that you will don't have any tax legal responsibility so long as the money remains in a tax-deferred account, such as the 401k or an IRA. The ordinary 401k provides a tax improvement this 12 months due to the fact the money comes out of your paycheck pre-tax. The Roth does not provide a present tax advantage. The cash comes from your verify after tax. You pay taxes on the money this year. The offset is that while you take the money out later, possibly during retirement which could also be a long time from now, depending to your age, the Roth comes out tax-free whereas the usual will incur tax on each buck you withdraw. To right your remark above, there is not any tax on the usual on the end of the year. On the grounds that your corporation does now not offer any fit, there's very little motivation for you to use an business enterprise sponsored plan versus an IRA except you need to contribute more to the plan than allowed for an IRA ($5000 for many individuals under age 50).