The start of the year is the perfect time to review your retirement savings, including pre-tax versus Roth 401(k) contributions.

Roughly 86% of 401(k) plans offered a Roth account in 2020, up from 75% in 2019, according to the Plan Sponsor Council of America.

While pre-tax deposits offer a write-off and tax-deferred growth, after-tax Roth contributions may grow levy-free. But there’s more to consider than future brackets, financial experts say.

“In general, the goal is to take deductions at a higher tax rate and distributions at a lower one,” said certified financial planner Ken Waltzer, co-founder and managing partner of KCS Wealth Advisory in Los Angeles.

If you plan on more income or higher taxes in retirement, tax-free withdrawals from Roth contributions may make sense, and tax-deferred contributions may be better if you expect lower earnings and levies.

But that’s not always a winning strategy, according to Michelle Gessner, a Houston-based CFP and founder of Gessner Wealth Strategies.

“Investors are quick to discard the idea of making Roth contributions if they are in a high tax bracket because they want the deduction that comes with a regular 401(k) contribution,” she said.

However, the upfront write-off may not be worth it if you worry about the consequences of taxable required minimum distributions, she said.

When someone withdraws tax-deferred money from a 401(k), it boosts their income, which may trigger levies on Social Security and hike Medicare premiums.

The formulas for Social Security taxes, Medicare Part B and Medicare Part D use so-called modified adjusted gross income, or MAGI.

If half of your Social Security payments plus MAGI is over $34,000 ($44,000 for a joint return), up to 85% of those benefits may be taxable.

However, the bigger issue for retirees above certain income levels may be the surcharge for Medicare Part B, known as the Income Related Monthly Adjustment Amount, or IRMAA.

While the base amount for Medicare Part B premiums is $170.10 for 2022, payments go up once income exceeds $91,000 ($182,000 for joint filers). The calculation uses MAGI from two years prior.

Roth withdrawals, however, won’t show up on tax returns, said Gessner, meaning retirees don’t have to worry about these distributions causing Medicare premium increases.

Since no one can predict future tax rates, you may also consider creating a mix of pre-tax and after-tax funds from a diversification standpoint, experts say.

“It is great when clients have both Roth and traditional retirement savings,” said Catherine Valega, a CFP and wealth consultant at Green Bee Advisory in Winchester, Massachusetts.

If you have both pre-tax and after-tax funds, it may provide more options to craft an efficient retirement income plan, she said.