Roth vs Traditional 401(k) Calculator
Should you pay taxes now (Roth) or later (Traditional)? Enter your salary and expected retirement tax bracket to see which 401(k) type builds more after-tax wealth.
A Traditional 401(k) is funded with pre-tax dollars, reducing your current taxable income, with withdrawals taxed as ordinary income in retirement. A Roth 401(k) is funded with after-tax dollars (no current tax break) but all withdrawals in retirement — including decades of growth — are completely tax-free.
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Traditional 401(k)
Roth 401(k)
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This calculator is for informational and educational purposes only. Full Disclaimer
Advanced Roth vs Traditional 401(k) SECURE 2.0
⌄Personalized Roth vs Traditional 401(k) recommendation appears after you Calculate
Capture The Match First — Roth or Trad Decision Comes Second
Before agonizing over Roth vs Traditional, contribute enough to capture your full employer match. A 50% match is an immediate 50% return on your money — a guaranteed annual return that outweighs almost any Roth/Trad math difference. Note: employer match is ALWAYS pre-tax, regardless of whether YOUR contributions are Roth or Traditional.
| Match Formula | You Contribute | Employer Adds | Effective Return |
|---|---|---|---|
| 100% match up to 3% salary | 3% of $80K = $2,400 | $2,400 | +100% Year 1 |
| 50% match up to 6% salary (most common) | 6% of $80K = $4,800 | $2,400 | +50% Year 1 |
| 100% on first 3% + 50% on next 2% | 5% of $80K = $4,000 | $3,200 | +80% Year 1 |
| Safe Harbor 3% (non-elective) | $0 required | $2,400 | +free |
- Pre-2023: All employer matches went to Traditional/pre-tax accounts, regardless of YOUR election.
- SECURE 2.0 (2023+): Employers MAY now offer Roth match treatment (employee elects) — but only if the plan supports it AND your match becomes immediately vested.
- Default reality: Most plans still default match to Traditional (pre-tax) even when you contribute Roth. Verify with HR before assuming Roth match.
- Vesting rules apply: Match dollars typically vest over 3-6 years. Leaving early forfeits unvested portion.
Priority order for retirement contributions
- 401(k) up to full employer match — capture the free money first
- Max HSA if eligible ($4,400 self / $8,750 family in 2026) — only triple-tax-advantaged account
- Max Roth IRA if eligible ($7,500) — tax-free growth, flexible withdrawals
- Continue 401(k) up to $24,500 limit — Roth or Trad based on bracket math
- Mega Backdoor Roth if 401(k) plan allows after-tax + in-service distributions
- Taxable brokerage — most flexible but tax-inefficient
Match priority is universally recommended in personal finance literature. SECURE 2.0 §604 added Roth-match option (effective 2023). Vesting rules per ERISA §203. The "free money" framing is foundational — see Bogleheads investment priority wiki.
Bracket Arbitrage — The Core Math
The Roth vs Traditional 401(k) decision is fundamentally a tax-rate timing problem: pay tax now (Roth) at your current marginal rate, or pay later (Traditional) at your future retirement rate. The whole question is: which rate will be higher?
| Roth contribution (after-tax cost) | ~$31,410/yr |
| Traditional contribution (full $24,500 invested) | $24,500/yr |
| Roth ending balance (tax-free) | ~$1,548,000 |
| Trad ending balance (gross) | ~$1,548,000 |
| Trad after retirement tax | ~$1,207,000 |
| Roth advantage (assumes deduction NOT reinvested) | +$341,000 |
| Scenario | Now → Retirement | Recommendation | Reasoning |
|---|---|---|---|
| Early career, low bracket | 12% → 22% | Roth 401(k) | Lock in 12% now; pay 22% in retirement |
| Mid-career, similar brackets | 22% → 22% | Roth (slight edge) | Mathematically equivalent; Roth wins on flexibility |
| Peak earner, lower retirement | 32% → 22% | Traditional | Capture deduction at top bracket; withdraw at lower |
| Future tax-rate hike expected | 22% → 28%+ | Roth 401(k) | Hedge against legislative risk |
| Plans aggressive Roth conversions later | 32% → 12% gap years | Traditional + ladder | Convert at 12-22% in early retirement |
2026 brackets per IRS Rev. Proc. 2025-32. Bracket-arbitrage analysis is the foundational Roth/Trad framework. Roth's structural benefits (no RMDs for owner, tax-free legacy, MAGI-friendly for IRMAA) often tip "tied" decisions to Roth.
SECURE 2.0 §603 — Forced Roth Catch-Up at $150K Wages (NEW for 2026)
A major rule change taking effect in 2026 plan years: if you earned over $150,000 in FICA wages in the prior year (2025), your 401(k) catch-up contribution must be made as Roth (after-tax) — you cannot elect Traditional pre-tax for catch-up. This is per SECURE 2.0 §603, originally scheduled for 2024 but delayed twice to give plan administrators time to comply.
| Your Situation | 2026 Catch-Up Treatment | Tax Impact |
|---|---|---|
| Under 50, any income | Not catch-up eligible | Normal contribution choice (Roth or Trad) |
| 50+, FICA wages ≤ $150K (2025) | Either Roth or Traditional | You choose |
| 50+, FICA wages > $150K (2025) | MUST be Roth (after-tax) | Catch-up tax-free in retirement |
| 50+, employer plan has NO Roth option | NO catch-up allowed | $8,000 contribution opportunity lost |
| 60-63 super catch-up | Same Roth requirement applies | $11,250 must be Roth if earning over $150K |
- Threshold: $150,000 in FICA wages (Social Security + Medicare wages, Box 3 of W-2) — NOT total compensation. Bonuses included if subject to FICA.
- Threshold tested in prior calendar year: 2025 W-2 → 2026 plan year impact.
- Self-employed: net earnings from self-employment (Schedule SE) are tested similarly.
- Multiple employers: treat each independently — only triggers at the employer where you exceeded $150K with that employer alone.
If your plan has no Roth option
If your employer's 401(k) does NOT offer a Roth option AND you earn over $150K, you simply cannot make catch-up contributions in 2026. The $8,000 catch-up opportunity ($11,250 for 60-63) is forfeited. Action item: ask HR if Roth option is available; if not, advocate for it being added. Most large employers added Roth options before the 2026 deadline, but smaller plans may not have.
Why this matters even if Trad would be optimal for you
For someone in the 32% bracket who'd normally choose Traditional, being forced to use Roth means paying $2,560 in tax on $8,000 of catch-up contribution. You can offset this by reducing your regular (non-catch-up) Traditional contribution if needed to manage take-home pay. The catch-up Roth requirement is mechanical, not a strategic choice — work around it by adjusting your overall mix.
SECURE 2.0 §603 (Roth treatment of catch-up contributions for high earners) per Pub. L. 117-328. Original effective date 2024, delayed by IRS Notice 2023-62 to 2026 plan years. Holland & Knight 2025 Roth catch-up final regulations.
The Split Strategy — Why Most Advisors Recommend Both
Many financial planners recommend splitting 401(k) contributions between Roth and Traditional rather than going 100% one way. This provides tax diversification against an unknown future tax-rate environment and gives you flexibility in retirement to manage withdrawals tax-efficiently.
Tax-rate uncertainty ?
Federal tax rates are set by Congress and change every 5-15 years. Locking 100% into either Roth or Traditional bets on a specific future tax environment. Splitting hedges against any direction of change.
Retirement flexibility ⚙
Having both buckets means you can pull from Trad in low-bracket years (filling 12-22%) and Roth in high-bracket years (avoiding push into 24-32% or IRMAA tier).
RMD management 73+
Traditional 401(k) and Roth 401(k) BOTH have RMDs at 73 (unlike Roth IRA). But you can roll Roth 401(k) → Roth IRA at retirement to escape RMDs entirely on the Roth portion.
Estate planning → heirs
Roth balances pass to heirs tax-free (still 10-year rule for non-spouse). Traditional balances are fully taxable to heirs at THEIR bracket. Splits give you legacy options.
| Profile | Suggested Roth/Trad Split | Reasoning |
|---|---|---|
| Under 30, expecting income growth | 100% Roth | Lock in lowest career bracket |
| 30s-40s, mid-career stable | 50/50 split | Diversify against tax-rate uncertainty |
| 50s, peak earnings, expecting lower retirement | 20% Roth / 80% Trad | Capture peak deduction; small Roth for flexibility |
| Over 50 + > $150K wages | Forced Roth catch-up; flexibility on base | SECURE 2.0 §603 mandates Roth catch-up |
| Under 30s, irregular income | 50/50 | Diversify when current bracket is volatile |
| Approaching FIRE retirement | Heavy Trad + plan conversion ladder | Use ladder strategy in early retirement gap years |
Split strategy advocated by Vanguard, Fidelity, Schwab in default investor guidance. Roth 401(k) → Roth IRA rollover at retirement (pre-RMD) eliminates the RMD requirement on Roth dollars — a key planning insight.
2026 401(k) Contribution Limits — Every Cap That Matters
2026 limits are up from 2025 across the board. The base 401(k) limit increased from $23,500 to $24,500. The catch-up at age 50+ increased $500 to $8,000. The super catch-up for ages 60-63 (under SECURE 2.0) is $11,250.
| Limit | 2026 | 2025 | Change |
|---|---|---|---|
| Base 401(k) elective deferral | $24,500 | $23,500 | +$1,000 |
| Catch-up 50+ | $8,000 | $7,500 | +$500 |
| Super catch-up 60-63 | $11,250 | $11,250 | $0 |
| Total cap (employee + employer) | $70,000 ($77,500 at 50+) | $70,000 | $0 |
| Highly compensated employee threshold | $160,000 | $155,000 | +$5,000 |
| Annual compensation limit (415) | $360,000 | $350,000 | +$10,000 |
- Under 50: $24,500 employee + employer match (typically 3-6% of salary)
- 50-59: $32,500 ($24,500 + $8,000 catch-up) + employer match
- 60-63: $35,750 ($24,500 + $11,250 super catch-up) + employer match
- 64+: back to $32,500 (super catch-up only available 60-63)
Roth 401(k) vs Roth IRA — key differences
| Feature | Roth 401(k) | Roth IRA |
|---|---|---|
| 2026 contribution limit | $24,500 (or up to $35,750 with catch-ups) | $7,500 ($8,600 at 50+) |
| Income limit | NONE | $153K-$168K phase-out single / $242K-$252K MFJ |
| Employer match | YES (typically Trad treatment) | NO |
| Investment options | Plan-limited (often 10-20 funds) | Anything (full brokerage) |
| RMDs at 73 | YES (unless rolled to Roth IRA) | NO (for owner) |
| Loans allowed | Plan-dependent (often yes, up to $50K) | NO |
| Withdrawal flexibility | Limited until 59½ or separation | Contributions always withdrawable |
All 2026 limits per IRS Notice 2025-67. The total cap (§415(c)) of $70,000 includes employee + employer + after-tax contributions — relevant for Mega Backdoor Roth strategies.
Continue your retirement decision
Things to Know
Essential concepts for understanding your results
Tax TimingWhen do you pay tax with each option?
Traditional 401(k): tax deduction now (reduces current taxable income), taxed on withdrawals in retirement. Roth 401(k): no deduction now (full tax on contributions), completely tax-free withdrawals in retirement. The choice hinges on one question: is your tax rate higher today or in retirement? If higher now, traditional wins (deduct at high rate, pay at low rate). If you expect higher rates later, Roth wins (pay low rate now, withdraw tax-free later).
Decision FrameworkHow do you choose between Roth and traditional?
Choose traditional if: you are in the 24%+ bracket, expect to be in a lower bracket in retirement, or want to maximize current cash flow. Choose Roth if: you are in the 12-22% bracket, expect tax rates to increase, want tax-free retirement income, or are early in your career with lower income. Split 50/50 if: you are unsure — this provides tax diversification, letting you optimize withdrawals based on your actual future tax situation.
Employer MatchWhere does the employer match go?
Regardless of whether you choose Roth or traditional, employer match always goes into a traditional (pre-tax) account. This means even all-Roth contributors end up with some traditional money. At retirement, you will have both tax-free (Roth) and taxable (traditional match) accounts — which is actually beneficial for tax planning flexibility. You can fill lower brackets with traditional withdrawals and supplement with tax-free Roth withdrawals.
The Simple Rule
If you expect to be in a higher tax bracket in retirement (income rises, tax rates increase, Roth conversions), choose Roth — pay taxes at today's lower rate. If you expect a lower bracket in retirement, choose Traditional — defer taxes to when the rate is lower. When in doubt, split contributions between both.
What Most People Miss
A Traditional 401(k) balance looks bigger, but it's not all yours — the IRS owns a portion equal to your future tax rate. A $1M Traditional balance at a 22% retirement rate is really $780K. A $1M Roth balance is the full $1M. Also, Roth 401(k) withdrawals don't count toward the income threshold that makes Social Security taxable.
People Also Ask
Can I contribute to both Roth and Traditional 401(k)?
Which is better if tax rates go up in the future?
Does my employer match go into Roth or Traditional?
How to Use This Calculator
Enter your current annual salary, the percentage you contribute to your 401(k), your current federal tax bracket, and your expected tax bracket in retirement. The calculator projects both account values over time, accounting for pre-tax contributions (Traditional) vs post-tax contributions (Roth) and their respective tax treatments at withdrawal.
Example: A 30-year-old earning $90,000, contributing 10% ($9,000/year), in the 22% bracket now and expecting to be in the 12% bracket in retirement: the Traditional 401(k) wins by approximately $62,000 at age 65 because the tax deferral compounds more efficiently when your current bracket is higher than your future bracket.
Roth 401(k) vs Traditional 401(k): Complete 2026 Comparison
| Feature | Traditional 401(k) | Roth 401(k) |
|---|---|---|
| 2026 contribution limit | $24,500 ($31,000 if age 50+, $34,750 if age 60-63) | |
| Tax on contributions | Pre-tax (reduces taxable income now) | After-tax (no tax break now) |
| Tax on withdrawals | Taxed as ordinary income | Tax-free (contributions + growth) |
| Required Minimum Distributions (RMDs) | Required starting at age 73 | No RMDs (after SECURE 2.0) |
| Employer match | Always goes to Traditional (pre-tax) side, regardless of your election | |
| Income limits | None — available at any income level (unlike Roth IRA) | |
| Best for | Higher bracket now than expected in retirement | Lower bracket now, expect higher later, or want tax diversification |
The Tax Bracket Decision Framework
The Roth vs Traditional question boils down to one thing: will your tax rate be higher or lower in retirement? If higher later, pay taxes now (Roth). If lower later, defer taxes (Traditional). Here's how to think through it:
| Current bracket | Expected retirement bracket | Better choice | Why |
|---|---|---|---|
| 10-12% | 12% or higher | Roth | Low tax cost now, likely same or higher bracket later |
| 22% | 12% | Traditional | Save 10% on every dollar contributed |
| 22% | 22% | Either / Split | Same bracket = same outcome; split for tax diversification |
| 24-32% | 12-22% | Traditional | Significant bracket drop = large tax deferral benefit |
| 35-37% | 22-24% | Traditional | High earners almost always benefit from deferral |
The wild card: Future tax rates are unknowable. If Congress raises tax rates (which many economists expect given the national debt), Roth contributions made today at 22% could be worth far more than Traditional contributions that will be taxed at 25-30% in retirement. This uncertainty is the strongest argument for contributing to both — tax diversification hedges against an unpredictable future.
The Employer Match Rule
Regardless of whether you elect Roth or Traditional for your own contributions, your employer's matching contributions always go into the Traditional (pre-tax) side. This means even a 100% Roth employee will have some Traditional 401(k) balance. The match itself grows tax-deferred and is taxed as income when withdrawn. This is important for retirement income planning — you'll have both taxable and tax-free buckets regardless of your election.
The Split Strategy: Why Many Advisors Recommend Both
Rather than going all-in on one type, many financial planners recommend splitting contributions. A common approach: contribute enough Traditional to lower your taxable income into a lower bracket, then put the rest into Roth. This gives you tax-free withdrawals (Roth) for discretionary spending in retirement and taxable withdrawals (Traditional) for base living expenses — with the flexibility to choose which bucket to pull from each year based on your actual tax situation.