This is the White Code Investor Podcast, where we help those who wear the White Code get a fair shake on Wall Street.

We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011.

Here's your host, Dr. Jim Dove.

Welcome to episode number 11 of the White Code Investor Podcast.

This episode is sponsored by the Physician on Fire at PhysicianonFire.com.

PhysicianonFire is a multi-millionaire and an anesthesiologist in his early 40s who is on the verge of retirement.

He has taken the concepts used by fire enthusiasts for years, frugality, budgeting, conscious spending, intelligent investing, mobile lifestyles, and an appropriate retirement spending plan, and applied them to a Physician career track and income.

Check it out today at PhysicianonFire.com.

Thank you for what you do. The work you do matters. You're likely on your way into work or on your way home from work, and maybe a little bit tired, maybe a little bit burned out, maybe feeling you're not making a difference.

I assure you you are. The little things you do each day have dramatic importance in the lives of your patients and those you serve.

Today's episode is going to be all about the Roth vs. Traditional 401K Decision.

We're not going to be talking about today our backdoor Roth IRAs, Roth conversions, after tax contributions to a 401K, or the mega backdoor Roth IRA.

Those are all separate concepts and it's important to keep them separate in your mind as you discuss this, because once you start confusing these concepts one with another, it can become really difficult to figure out exactly what's going on.

Before you need to even worry about a Roth 401K, you need to determine whether your particular 401K actually offers this option.

Although it is becoming more and more common, there are still plenty of 401Ks out there, where the only contributions you can make are to the tax deferred option.

You can also do this with a 403B, which is generally what's offered at an academic medical center, or even with a 457. They often have Roth options as well.

Remember that a traditional or tax deferred 401K is basically a big tax break when you put the money in, and then it grows in a tax protected manner, and when you take the money out, you pay taxes that you're then marginal tax rate.

With a Roth 401K contribution, you put after tax money in, and then it grows in a tax protected manner, and when it comes out, it comes out completely tax-free.

So both types of accounts are excellent, and there are great ways to save for retirement. However, there are slight differences, and that can make it tricky to decide which one you should be using when you have the option.

Remember always that the employer portion of the contribution, or the match, is always tax-deferred.

The only portion that can be a Roth contribution is your employee portion, which if you're under 50 is $18,000 per year. If you're 50 or over, you can do a catch-up contribution of another $6,000 per year.

The basic idea behind having some money in a Roth account, and some money in a tax deferred account when you get to retirement, is that you want to have tax diversification.

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