⚖️ Why We Use Both Roth and Pre-Tax Accounts

And why Roth often shines in lower-income years

A recent client win sparked a great planning conversation.

Even while working PRN, they chose to contribute a modest percentage to a Roth 403(b). This wasn’t about doing the most. It was about choosing the right tool for this season.

From a CFP® perspective, retirement planning is rarely either Roth or pre-tax.
The strongest plans often use both.

Pre-Tax Accounts and What They Do Well

Traditional pre-tax accounts like a Traditional IRA, Traditional 401(k), or Traditional 403(b) reduce taxable income today.

That can be incredibly valuable in:
• higher earning years
• peak career income
• seasons with multiple income streams
• years where tax brackets are higher

Pre-tax contributions create immediate tax relief and can support cash flow during high-earning periods.

But they come with a tradeoff.
Those dollars are taxed later when withdrawn.

Why Roth Contributions Are Powerful in Lower-Income Years

Roth contributions are made with after-tax dollars, but the growth and withdrawals can be tax-free in retirement.

From a planning standpoint, Roth accounts often shine in:
• lower income years
• PRN or reduced hours
• career transitions
• early career stages
• years with deductions or credits

When income is lower, the tax cost of contributing to Roth is often lower too. That means you’re essentially locking in a lower tax rate on those dollars.

This is why many CFP® strategies intentionally shift toward Roth during these seasons.

How We Marry the Two in Real Planning

This is where the strategy lives.

Instead of asking:
Should I do Roth or Traditional?

We ask:
What mix creates flexibility over time?

A common approach looks like this:
• Roth contributions during lower-income or variable years
• Pre-tax contributions during higher-income years
• A combination that builds tax diversification

Tax diversification means having:
• some money taxed now
• some money taxed later
• some money potentially never taxed again

That flexibility gives future you more control over taxable income in retirement.

Why This Matters Beyond Taxes

This isn’t just about math.

From a behavioral and nervous system perspective, Roth contributions can feel safer in variable income seasons. There’s no future tax bill attached to the growth, which can reduce anxiety and decision fatigue.

At the same time, pre-tax accounts play a critical role when income rises and tax efficiency becomes more important.

Planning isn’t static.
It evolves with income, life, and capacity.

The Real Win in This Client Decision

The win wasn’t the percentage.

The win was:
• starting where they are
• choosing sustainability
• aligning tax strategy with income reality
• keeping long-term investing active without pressure

That’s textbook CFP® planning done in real life.

The Takeaway

You don’t need to commit to one tax strategy forever.

You need a plan that can adapt.

Roth and pre-tax accounts aren’t competitors.
They’re complementary tools.

The goal is not to guess future tax rates perfectly.
The goal is to give yourself options.

And options are what reduce stress and increase confidence over time.