United States · IRS retirement rules
Roth vs traditional 401(k).
Compare what a Roth and a pre-tax 401(k) contribution are each worth after tax at retirement, at the same cost to your paycheck.
With the same investment return, the tax rate decides it: traditional wins when your retirement bracket is lower than today's, Roth wins when it is higher, and they tie when the two rates are equal.
Your assumptions
Comparison
The comparison, step by step
A pre-tax contribution lowers your taxable pay today; a Roth contribution does not, but withdrawals in retirement are tax-free if the rules are met. To compare them fairly the tool holds your take-home cost equal. If giving up $7,000 of take-home pay buys a $7,000 Roth deposit, the same $7,000 buys a larger pre-tax deposit: $7,000 divided by (1 minus your tax rate today). Both balances then grow at the same return for the same number of years, and the traditional balance is taxed at your retirement rate when it comes out.
Because both balances are multiplied by the same growth factor, the result reduces to a single comparison: (1 − tax today) against (1 − tax in retirement). Return and years change the dollar size of the gap, not who wins.
Worked example
At a 24% rate today and 18% in retirement, a $7,000 yearly cost over 25 years at 7% buys a $7,000 Roth deposit or a $9,211 pre-tax deposit a year. The Roth grows to $473,735 tax-free. The traditional account grows to $623,336 and is worth $511,135 after 18% tax, so traditional comes out $37,400 ahead. At 22% in both periods the two finish at $473,735 and $473,735, a tie. At 12% today and 22% in retirement, Roth wins by $53,834.
What moves the answer in real life
- Marginal, not average, rate. Use the rate on your last dollar of income, including state tax. Many people are in a lower bracket in retirement, but large pre-tax balances, required minimum distributions from age 73, pensions and Social Security taxation can push it back up.
- Tax diversification. Having both account types lets you choose which to draw from each year and manage brackets, Medicare IRMAA surcharges and the taxation of Social Security.
- Moving states. A Roth is more valuable if you expect to live in a higher-tax state later; the reverse for a move to a no-income-tax state.
- Employer match. The employer match goes into the pre-tax bucket, even if your own contribution is Roth, under most plans.
- Eligibility. Starting in 2026, 401(k) catch-up contributions for people whose prior-year wages from the sponsor exceeded $150,000 generally must be Roth. Roth 401(k) contributions have no income limit, unlike Roth IRAs.
What this tool does not cover
It assumes a single contribution rate and a lump of years, a constant return, qualified Roth withdrawals (the account has been open five years and you are 59½ or older) and no early-withdrawal penalties. It does not model the saver's credit, which rewards lower-income savers for both types, or tax changes that Congress may make before you retire.
Common mix-ups
Using your average tax rate instead of your marginal rate; comparing equal contributions instead of equal take-home cost (a traditional deposit is larger because the tax saved stays invested); and forgetting that the employer match is usually pre-tax even when your own contribution is Roth.
Frequently asked questions
Is a Roth or traditional 401(k) better?
Neither always wins. If your tax rate in retirement is below your rate today, traditional comes out ahead; if it is higher, Roth does; if equal, they tie, assuming the same return and a take-home-equal comparison.
Why does the traditional deposit come out larger?
A $7,000 reduction in take-home pay covers a bigger pre-tax contribution because the tax you would have paid stays in the account. At a 24% rate, $7,000 of take-home buys about $9,211 of pre-tax deposit.
Do Roth 401(k) withdrawals have to be taxed?
Qualified Roth withdrawals are tax-free. They need a five-year holding period and typically age 59 and a half, death or disability. Non-qualified withdrawals of earnings are taxable and may be penalized.
Does the employer match go in the Roth account?
Under most plans the employer match is made pre-tax even when your own contribution is Roth. Some plans now allow Roth employer contributions; ask your plan administrator.
Can I split contributions between Roth and traditional?
Many plans allow it. The total of both types is still limited to the $24,500 deferral limit (plus catch-up) for 2026.
Sources
- IRS, Roth comparison chart — how designated Roth and pre-tax 401(k) contributions and distributions are taxed (retrieved 2026-11)
- IRS Notice 2025-67, 2026 cost-of-living adjustments for retirement plan limitations — $24,500 deferral limit, $8,000 and $11,250 catch-ups, $72,000 annual additions limit (retrieved 2026-11)
- IRS, 401(k) and profit-sharing plan contribution limits — how deferral, match and catch-up limits interact (retrieved 2026-11)
Last updated November 8, 2026. Tax-law figures are for tax year 2026.
Estimate only
This is an educational calculation, not tax, legal or investment advice. Your plan, lender, employer or tax professional has the final numbers.