Traditional and Roth are two tax treatments for the same retirement accounts. Traditional contributions are deducted from income now and taxed when withdrawn. Roth contributions are taxed now and withdrawn tax-free. The rule of thumb is simple: pay the tax when your rate is lowest. If you expect a lower rate in retirement, traditional wins. If you expect a higher one, Roth wins. If they are equal, the math comes out the same.
A worked case: someone in the 32% bracket puts $20,000 into a traditional 401(k), saving $6,400 of tax this year. In retirement they withdraw it at an effective rate of 18%, paying about $3,600 on that money plus its growth proportionally. The traditional route came out ahead by the gap between 32% and 18%. Flip the rates, a 12% bracket now and 24% later, and Roth wins by the same logic.
A few factors tilt the decision. High earners in expensive states often favor traditional because the deduction is worth a lot today. Early-career people in low brackets often favor Roth. Roth money adds flexibility since withdrawals do not push you into higher brackets, raise Medicare premiums, or make Social Security taxable.
The common mistake is treating it as all-or-nothing. Splitting contributions between the two gives you a choice of which pot to draw from later, which is worth something when future tax rates are unknown.