About the Roth 401(k) vs Traditional 401(k) Calculator
This calculator compares the two ways to fund a 401(k): Roth contributions, which are made after tax and come out tax-free, and traditional (pre-tax) contributions, which cut your tax bill today but are taxed as ordinary income when withdrawn. Enter your yearly contribution, how long it will grow, your marginal tax rate now and the rate you expect in retirement, and see which choice leaves you with more spendable money.
It is built for employees choosing an election in their plan, people whose income is changing, and anyone wondering whether to split contributions between both. For a fair comparison, the traditional option can invest the tax it saves each year in a taxable account — otherwise the Roth looks better simply because it is a larger after-tax contribution. Employer matching contributions are pre-tax under both options and are taxed at withdrawal.
The rule of thumb this tool makes visible: if your tax rate in retirement will be lower than today, traditional usually wins; if higher, Roth wins; if the same, they come out about even (Roth slightly ahead when the tax savings would otherwise sit in a taxable account). The 2026 employee deferral limit is $24,500, plus catch-ups from age 50, and applies to Roth and traditional contributions combined. Since 2024, Roth 401(k)s have no required minimum distributions during your lifetime.
With the default inputs, the roth advantage (negative = traditional wins) is $12,594.76. Change any value above to recalculate instantly.
How to use the roth 401(k) vs traditional 401(k) calculator
- 1Enter how much you contribute to your 401(k) each year and for how many years.
- 2Enter an expected annual return.
- 3Enter your combined federal and state marginal rate now and your expected rate in retirement.
- 4Choose whether to invest the yearly tax savings from traditional contributions.
- 5Compare after-tax values and the break-even tax rate.
Formula and method
Both options put the same contribution C into the 401(k) each year, so the account balances grow identically at return r for n years. The Roth balance is entirely yours in retirement, while the traditional balance is reduced by your retirement tax rate. Contributions are assumed at the end of each year.
In exchange, traditional contributions lower your tax now by C × t_now each year. With the “invest the tax savings” option, that money goes into a taxable account whose growth is reduced by the tax-drag percentage. Employer matches are pre-tax in both cases and are taxed at the retirement rate. The break-even rate is the retirement tax rate at which both options give the same after-tax value.
- C
- Annual employee contribution
- t_now
- Marginal tax rate today
- t_later
- Tax rate on withdrawals in retirement
- A(r, n)
- Future value of $1 a year for n years at return r
Worked examples
$15,000 a year for 25 years, 24% now vs 22% later
Contributions plus the $4,000 match grow to about $1.20 million in either account. The Roth keeps all $948,736 from its own contributions plus the after-tax match, about $1.146 million. Traditional keeps 78% of the balance plus a taxable account built from $3,600 a year of tax savings, about $1.133 million. Roth edges ahead by about $12,600 because the side account loses growth to tax drag; the break-even retirement rate is about 20.7%.
Peak earner: 35% now, 22% in retirement, savings not invested
Without investing the tax savings, the Roth always looks better because more after-tax money went in. Here Roth ends with $1,004,390 versus $783,424. That comparison is unfair — compare with the savings invested to see the true trade-off.
Peak earner with tax savings invested
Investing the $8,575 of yearly tax savings at a 7% return with 15% tax drag builds about $313,746. Added to the $783,424 after-tax traditional balance, traditional wins by about $92,781 because the retirement rate (22%) is far below today’s 35%.
Frequently asked questions
Is a Roth 401(k) or traditional 401(k) better?+
It depends mainly on your tax rate now versus in retirement. If you expect a lower rate in retirement, traditional usually wins; if you expect a higher rate, Roth wins. Many savers split contributions to diversify their future tax exposure.
Do Roth 401(k)s have income limits?+
No. Unlike a Roth IRA, a Roth 401(k) has no income limit — anyone whose plan offers it can contribute. The $24,500 limit for 2026 (plus catch-ups) applies to Roth and pre-tax deferrals combined.
Is my employer match Roth or pre-tax?+
Matching contributions have traditionally been pre-tax even when you contribute Roth. SECURE 2.0 lets plans offer Roth matching contributions, which are taxable to you in the year they are made.
Do Roth 401(k)s have required minimum distributions?+
Not anymore. Starting in 2024, designated Roth accounts in 401(k) and 403(b) plans are exempt from lifetime RMDs, the same as Roth IRAs. Traditional 401(k)s still require RMDs from age 73 or 75.
Why does invested tax savings matter in the comparison?+
A $10,000 Roth contribution costs more take-home pay than a $10,000 pre-tax contribution. To compare fairly, the traditional saver must invest the difference; if they spend it instead, the Roth wins by default.
When are Roth 401(k) withdrawals tax-free?+
Qualified distributions are tax-free when you are at least 59½ and the Roth account has been open for five tax years. Earnings withdrawn earlier may be taxed and penalized.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.