If you're not making an effort to build yourself a retirement nest egg, you're doing yourself a major disservice. Granted, a lot of people have been forced to pause their retirement plan contributions in 2022 to cope with inflation, and that's understandable. But those who never make an effort to build long-term savings might struggle financially during their senior years.

Meanwhile, if you are actively working on building a nest egg, you may be doing so in a 401(k) plan. It especially pays to contribute to a 401(k) if you work for a company that offers some type of matching incentive. That way, you get free money for your retirement.

A person at a laptop.

Image source: Getty Images.

But there's one specific 401(k) feature you should look out for in your employer's plan. Taking advantage of it could help you enjoy more financial flexibility later in life.

Set yourself up with tax-free withdrawals

These days, an estimated 88% of 401(k) plans offer a Roth savings feature, according to the Plan Sponsor Council of America. And that's a feature you may want to sign up for.

With a Roth 401(k), you'll lose the immediate tax break that comes with funding a traditional 401(k). But you'll gain the benefit of tax-free withdrawals during retirement. And that's an important thing.

We know what today's tax brackets look like. And unless you expect your income to change dramatically in the next 12 months, you can probably figure out what bracket you'll land in for 2023.

But do you know what your tax bracket and rate will look like once you kick off retirement? You probably have no clue, especially if that milestone is decades away. That's because we don't know what tax changes will come down the pike.

If tax rates rise across the board, that's something a Roth 401(k) might help you not have to worry about. That's because your withdrawals won't count as taxable income.

Now one thing you should know is that saving in a Roth 401(k) won't get you out of paying required minimum distributions, or RMDs. The only tax-advantaged retirement savings plan to not impose those is the Roth IRA. But if you're forced to take RMDs from a Roth 401(k), they at least won't add to your tax liability.

All told, not having to pay taxes on the retirement plan withdrawals you take as a senior could make that period of life much less stressful, and much easier to manage. So if your company's 401(k) plan includes a Roth savings feature, you may want to sign up.

You should also know that there are no income limits to worry about with a Roth 401(k). Higher earners are barred from making direct contributions to a Roth IRA, but with a 401(k), you don't have to stress about your income exceeding a certain threshold.

It's estimated that almost 28% of workers with a 401(k) plan made Roth contributions in 2021, up from 18% in 2016. And so it's fair to say that Roth 401(k)s are growing in popularity for good reason.