NEW YORK —  More and more employers are offering workers the option to save for retirement using a Roth 401(k), a hybrid between a regular 401(k) plan and a Roth IRA. Made permanent by Congress in 2006, the Roth 401(k) allows employees to make contributions with after-tax dollars. There's no tax deduction upfront, but the account grows tax-free.

The payoff comes when it's time to use the money: The employee can make withdrawals during retirement tax-free, as long as he or she is 59 1/2 and has held the account for five years or more. In most cases, the Roth 401(k) gets you a better deal than a traditional 401(k). What's more, you can put more away with a Roth 401(k) than you can with a Roth IRA. (The 2007 contribution limit for the Roth 401(k) is $15,500, $20,500 for those 50 or older by the end of the year. Compare that with the 2007 Roth IRA limits, which are $4,000 a year or $5,000 for those 50 or older.)

But according to Kiplinger's Retirement Report, there are two cases in which you should choose the traditional 401(k) over the Roth 401(k). If you currently fall in the 33 percent to 35 percent tax bracket and expect that you will fall into a lower bracket during retirement, stick with the traditional 401(k). You're getting a higher tax break now (33 cents on the dollar) than you will during retirement (15 cents to 25 cents on the dollar).

Finally, choose the traditional 401(k) if you plan on giving the money to charity. You'll save taxes now on your contribution, and the charity won't have to pay tax on the distribution anyway.