Julian and Don gave you some great advice. And for getting started at an early age, a Roth (either IRA or 401k) is a great first step.
But let's face it, you can't predict what your future earnings or tax rates will be. And unless you have a crystal ball, it's impossible to know what the best approach will be 40 years from now when you retire.
This can be hard to do, but try to imagine your life in retirement, and specifically replacing your paycheck with other sources of income. You need options for doing that in the most tax efficient way possible, which means you need three distinct buckets of money: 1) tax exempt, 2) tax deferred and 3) taxable.
With a Roth (tax exempt bucket) there's no upfront tax break, but in retirement you don't owe any tax on withdrawals. The same is not true of traditional IRAs (tax deferred bucket), because you got a pass from Uncle Sam on the contribution, you owe taxes when you take out your money. Individual accounts (taxable bucket) get no up front break, but offer capital gains rates which are preferable over earned income rates.
At your stage of life, the key is to just GET STARTED. Can you make the argument that the Roth probably is best for a young person long term? Yes, but if you told me you absolutely need the tax savings now, then open a traditional IRA. Either choice you make, you're headed in the right direction. And by the way, the kinds of investment you would ideally own in each tax bucket are not the same.
But that's for a different post!
I would suggest using your employer sponsored 401(K) and take advantage of any matching that is offered by your company. After that, if you have free cash flow and fall underneath the income threshold, I would suggest saving into a Roth. If you are a young professional with a high salary such as doctor, dentist or lawyer, you may not be able to contribute to a Roth IRA but should check to see if your company offers a Roth 401(k).
Imagine you are a farmer and it is time to plant your crop. Uncle Sam offers you a choice, you can pay the tax you owe on the current value of the seeds you are about to plant or you can wait six months and pay the tax on the value of the crop. Most people would see the wisdom in paying it on the lower value of the seeds today. That is the same option you have with a traditional IRA and a Roth IRA. Pay the taxes on the lower amoount of money going into the Roth today, or pay taxes on the much larger value in the Tradtional IRA later.
Visit a local independent financial planner and look at the numbers.
The information provided should not be interpreted as a recommendation, no aspects of your individual financial situation were considered. Always consult a financial professional before implementing any strategies derived from the information above
While all of this is good advice, lets not lose the Forrest for the trees. What's most important is your savings rate and asset allocation. Next to those decisions the Roth/IRA decision is insignificant. A young professional saving 14% of income using an 80% equity portfolio will - 30, 40 years from now - run circles around one that defers 4% in a 40% equity portfolio- weather its pre-tax, post tax or anything in between. Get the deferral amount and allocation right, stay disciplined- and it will all work out just fine.
If you are in your 30's or early 40's, it's usually better to choose Roth over IRA. But before you choose anything make sure you are not giving up something of larger value, such as: 1) If your company plan provides a match, make sure you participate there, 2) Make sure you have a plan to build/replenish emergency savings, 3) Make sure your debts are decreasing.
There is nothing worse than working hard to build retirement funds, then to be forced to liquidate them for emergencies. I recommend a balance that makes you feel in control, and prepared for surprises.
The nice thing about the ROTH 401K is that it also allows you to manage how much taxable income you receive once you retire. We typically recommend having at least SOME of your contributions going into the ROTH side.
I agree with many in this conversation that the type of plan matters less. It is amount saved, allocation, and time that are the key factors, however, going under the assumption that all of those are well handled, I would highly encourage a Roth. Given that you are young and your compounding could be incredible over time, I personally would prefer to have all of that compounding on an after-tax basis.
Have your cake and eat it to. Max out the full amount to your defined contribution plans/IRA/401(k) plans which is $53,000 in 2016. This amount will reduce your taxable income. Let that grow tax-deferred and then convert it over to a Roth IRA account when you're ready to retire. By then, hopefully you'll be an accredited investor and you can take advantage of the IRA valuation discounts to then convert your taxable IRA to a tax free Roth account as a discounted basis saving hundreds of thousands of dollars.
Because you are both young and starting out in your career, a ROTH IRA is generally the way to go. The ROTH may provide you tax benefits if and when taxes increase in the future. Because you are young and just starting out in your career I am guessing you are in a lower tax benefit. Many young investors may be married with children and own a home, these can all be deductions for tax purposes, so another deduction may not provide a great deal of benefit. In retirement hopefully the home is paid off and the kids are gone, essentially you lose those tax deductions and tax free income from a ROTH can be very valuable.
If you are at a low income, then a ROTH. Are you planning on buying a home soon? You can take up to $10K for first time home buy. Do you see all the possible things you can take advantage of? I would need more information about YOU in order to give you good CLEAR information.