Roth vs Traditional 401k Calculator
Decide which retirement account is best for your future. This tool compares Roth 401k and Traditional 401k contributions side-by-side. By analyzing your current tax bracket versus your expected retirement tax bracket, we show you which option results in more after-tax wealth. Make an informed choice about your retirement strategy today.
After-Tax Retirement Value Over Time
| Age | Traditional After-Tax | Traditional Gross | Roth After-Tax | Roth Balance |
|---|
Roth vs Traditional 401k: Which Is Better?
The short answer: it depends on your tax rate now versus your tax rate in retirement. That is exactly what this calculator shows you — the precise dollar difference based on your specific situation.
How Traditional 401k Works
With a Traditional 401k, your contributions come out of your paycheck before taxes are calculated. This reduces your taxable income today — a real, immediate tax saving. Your money then grows tax-deferred until retirement. When you withdraw, every dollar is taxed as ordinary income at whatever your rate is then.
Best for: People who expect to be in a lower tax bracket in retirement than they are now.
How Roth 401k Works
With a Roth 401k, you contribute after taxes have already been taken. There is no tax break today. However, your money grows completely tax-free, and qualified withdrawals in retirement are 100% tax-free — including all the investment growth. Since 2024, Roth 401k accounts are also exempt from required minimum distributions (RMDs) during the owner's lifetime.
Best for: People who expect to be in the same or higher tax bracket in retirement, or who want tax-free income in retirement regardless of future tax policy.
The Simple Rule of Thumb
| Your Situation | Recommended Choice |
|---|---|
| Current tax rate < Retirement tax rate | Roth 401k — pay lower taxes now |
| Current tax rate > Retirement tax rate | Traditional 401k — defer to lower rate later |
| Uncertain / rates are equal | Split both — tax diversification hedges risk |
| Early career, low income | Roth — income (and rates) likely to rise |
| Peak earning years | Traditional — maximise today's tax deduction |
Frequently Asked Questions
Should I choose Roth or Traditional 401k?
Use the calculator above with your actual numbers. As a general rule: if you are early in your career and expect your income (and tax rate) to rise, Roth is usually the better choice. If you are in your peak earning years and expect lower income in retirement, Traditional often wins. When in doubt, many advisors recommend splitting contributions between both accounts for tax diversification.
What is the difference between Roth and Traditional 401k?
The core difference is when you pay taxes. Traditional contributions are pre-tax (tax savings now, taxed later). Roth contributions are after-tax (no savings now, but all growth and withdrawals are tax-free). Both accounts have the same annual contribution limits and grow through market investment.
Is Roth 401k better for young people?
Generally yes, for two reasons: (1) young people typically have lower incomes and lower marginal tax rates, making now the cheapest time to pay taxes; (2) the longer your money has to grow, the more valuable tax-free compounding becomes — starting at 25 vs 45 can mean hundreds of thousands of dollars more.
Can I have both Roth and Traditional 401k?
Yes, if your employer plan allows it. You can split your contributions in any proportion, as long as the total does not exceed the IRS annual limit ($23,500 in 2025, or $31,000 if age 50+). This "tax diversification" strategy is popular because it protects you regardless of which way tax rates move in the future.
What Is This Calculator?
A Roth vs Traditional 401k calculator answers the most important retirement account question: should you pay tax now (Roth) or later (Traditional)? A Roth 401k uses post-tax money — you pay income tax on contributions today, but all withdrawals in retirement are 100% tax-free. A Traditional 401k reduces your taxable income today, but every dollar withdrawn in retirement is taxed as ordinary income. Key rule: if your future tax rate > current tax rate, choose Roth; if lower, choose Traditional. The 2026 contribution limit is $23,500 (under 50) or $31,000 (age 50+).
When Should You Use This Tool?
- You are starting a new job and deciding which 401k option to elect on your enrollment form
- You expect to be in a higher tax bracket in retirement than you are today (choose Roth)
- You want to reduce your taxable income today to stay in a lower federal tax bracket (choose Traditional)
- You are comparing the after-tax value of $500/month in each account type after 30 years
- Your employer offers a match and you want to see the combined impact on both account types