Model after-tax retirement wealth for the same contribution rate under Roth (pay taxes now) versus Traditional (defer taxes now, pay later). Adjust your marginal tax rates, time horizon, and expected return —aligned with 2026 IRS limits context.
Updated May 5, 2026 Reviewed by the Best 401(k) Calculator Editorial Team · Aligned with IRS Notice 2025-82
Quick links: Need a primer on the trade-offs first? Read our 401(k) vs Roth IRA guide for the full tax-treatment breakdown. Already maxing out? Pair this tool with the main 401(k) calculator to project both buckets, or check take-home pay impact of switching contribution types.
Enter your assumptions below. We project balances with monthly compounding and compare after-tax outcomes at retirement.
Pre-tax vs after-tax bars —Roth after-tax equals the Roth balance.
Choosing between a Roth 401(k) and a Traditional 401(k) is one of the most common retirement planning questions in the United States. Both accounts grow tax-free on investments while money remains inside the plan, but they differ in when you pay income taxes. Traditional contributions reduce your taxable income today and are taxed as ordinary income when withdrawn in retirement. Roth contributions are made with after-tax dollars —there is no upfront deduction —but qualified withdrawals of earnings are generally income-tax-free. Because the IRS applies the same employee deferral dollar limits to Roth and Traditional 401(k) elections, the key economic question is whether paying taxes now or later leaves you with more spendable wealth after accounting for your tax rates and investment growth.
This page helps you think through that tradeoff numerically. Our model assumes the same percentage of salary is deferred in each scenario. For Traditional, the full deferral amount goes into the account pre-tax. For Roth, we reduce the contribution to reflect paying your current marginal tax rate on those dollars first, so both paths reflect a comparable economic sacrifice from take-home pay. At retirement, we apply your expected retirement tax rate to Traditional balances to estimate after-tax value, and we treat the Roth balance as fully tax-free when distributions are qualified. Real life is more complex —you might face state taxes, Medicare surcharges, Social Security taxation, and changing brackets —but this framework matches how many financial planners illustrate the core Roth versus Traditional decision.
| Feature | Traditional 401(k) | Roth 401(k) |
|---|---|---|
| Contribution | Pre-tax (reduces current taxable income) | After-tax (no current deduction) |
| Qualified withdrawals | Taxed as ordinary income | Tax-free earnings (if qualified) |
| RMDs (pre-SECURE 2.0 nuances) | Generally required from Traditional side | No RMDs for Roth 401(k) starting at RMD age under current law for designated Roth accounts in many cases —confirm with your plan |
For 2026, employee elective deferrals —whether you direct them to Traditional, Roth, or a mix —are subject to the same IRS caps: $24,500 for participants under age 50, with higher limits for catch-up ages (for example, $32,500 for many age 50+ filers, and $35,750 for eligible ages 60—3 under super catch-up rules). Employer contributions are subject to separate combined limits. Your plan may also allow after-tax non-Roth contributions, but those rules are distinct from Roth elective deferrals.
For the full breakdown of employee deferrals, catch-up limits, and employer contribution caps, see our 2026 401(k) Contribution Limits guide.
When you run the calculator, pay attention to three ideas together: pre-tax Traditional balance, Traditional after-tax value, and Roth balance (already expressed on an after-tax basis for qualified withdrawals). The break-even tax rate tells you roughly what future average tax rate on Traditional withdrawals would equalize the two strategies in this simplified model —useful intuition even though your actual future rate will depend on Congress, your state, and your distribution strategy. The annual tax savings line shows the approximate current-year federal-style benefit of Traditional deferral on your modeled contribution —not your entire tax return, just the deferral piece.
The bar chart overlays pre-tax and after-tax perspectives. Traditional bars show both the larger pre-tax accumulation and the shrinkage after retirement taxes. Roth bars align pre-tax and after-tax on the Roth side because qualified Roth distributions do not incur federal income tax on earnings in this illustration. If your chart shows Roth winning on an after-tax basis, you are in the “higher taxes later” or “long growth of tax-free dollars” story; if Traditional wins, your lower modeled retirement rate may dominate.
Roth tends to look better when you believe your marginal tax rate will be higher in retirement than it is today —for example, you are early in your career with lower earnings, you expect large tax-deferred balances that will fill lower brackets, or you expect tax rates to rise nationally. Roth can also appeal if you value tax diversification and want flexibility to manage Medicare IRMAA brackets, Social Security taxation, or legacy goals, because qualified Roth distributions do not add to taxable income in the same way Traditional withdrawals do.
Traditional tends to look better when you expect a lower average tax rate in retirement than today —for example, you are in peak earning years with high marginal rates, you plan to retire to a lower-tax state, or you will have years of lower income where you can convert or withdraw at low brackets. The upfront deduction also improves cash flow, which can help you pay down high-interest debt or build an emergency fund.
Some households split contributions between both types to hedge uncertainty.
In-plan Roth conversions (moving pre-tax 401(k) dollars into a Roth account within the same plan) and rollovers to a Roth IRA can both create taxable income in the year of the conversion. There is no 10% penalty solely for a qualified conversion itself, but the converted amount is generally included in ordinary income. You will want to consider whether paying taxes from outside assets preserves more retirement value than using withdrawal proceeds. Net unrealized appreciation and employer stock rules are specialized topics not modeled here.
Before converting, review your plan’s summary plan description, whether loans are outstanding, and whether you can roll funds to an IRA for more investment options. Some taxpayers spread conversions across years to avoid pushing into the next tax bracket. Because conversion analysis is highly individual, treat this page as a starting point rather than a recommendation. For the step-by-step mechanics including the 5-year clock subtleties, see our 401(k) Rollover Guide.
The "Roth or Traditional?" question reduces to a single calculation: compare your current marginal tax rate to your expected retirement marginal rate. If retirement rate > current rate, Roth wins. If current rate > retirement rate, Traditional wins. The trick is most people misjudge their future retirement rate — usually because they forget RMDs, Social Security, and pension all stack on top of each other.
To make the decision concrete, our editorial team modeled five income tiers with realistic 2026 federal + state marginal rates, projected retirement income (Social Security + pension + RMDs from a $1M balance), and the resulting "break-even" rate at which Roth and Traditional produce identical after-tax wealth. We ran each scenario through the calculator engine.
| Current Income | Current Marginal Rate (Fed+State) | Projected Retirement Marginal Rate | Roth vs Traditional Recommendation |
|---|---|---|---|
| $45K (single) | 17% (12% fed + 5% state) | 22-24% (RMDs + Social Security combine) | Roth wins clearly |
| $75K (single) | 27% (22% fed + 5% state) | 22-27% (similar bracket) | Mostly even — consider 50/50 split |
| $120K (single) | 29% (24% fed + 5% state) | 22-24% (lower without W-2) | Traditional slightly favored |
| $200K (single) | 37% (32% fed + 5% state) | 24-29% (RMDs push above expected) | Traditional favored, but Roth conversions in 60s recommended |
| $400K+ (single, HCE) | 40% (35% fed + 5% state) | 29-35% (large RMDs almost certain) | Traditional now + aggressive Roth conversions in early retirement |
What this tells you: The conventional wisdom "young = Roth, old = Traditional" is roughly right but oversimplifies. The real cutoff is around $100K-$120K of current single-filer income in 2026. Below that, Roth almost always wins because your future RMDs will push you into a higher bracket. Above that, Traditional usually wins for current contributions, but you should plan to do Roth conversions in your low-income early-retirement years (the "Roth conversion sweet spot" between retirement and Social Security/RMDs starting).
Methodology: Current marginal rate uses 2026 federal brackets plus 5% representative state rate. Projected retirement marginal rate factors in: $24K Social Security (85% taxable above $34K combined income), $0 pension (conservative), and IRS Uniform Lifetime Table RMDs on $1M growing at 5%. Break-even calculated by setting Roth-after-tax wealth = Traditional-after-tax wealth at age 80. Excludes Medicare IRMAA surcharge effects which can add 5-8% in high brackets. Source: Best401kCalculator.com Editorial Team modeling, May 2026.
After modeling hundreds of scenarios, our editorial team's working framework is income-tier based, not age-based. Pick your tier below for a starting recommendation; then run your numbers through the calculator above to confirm.
Default to Roth 401(k) — 100% of new contributions.
Your current marginal rate (12-22%) is almost certainly lower than the rate you will face in retirement once Social Security + RMDs combine. Roth captures today's low rate forever.
Bonus: Roth 401(k) RMDs were eliminated by SECURE 2.0 starting 2024 — one less retirement headache.
Mix it: 50% Roth, 50% Traditional — pure tax diversification.
You are in the indifference zone where the math comes out roughly equal. The hedge value of having both buckets in retirement (so you can manage your bracket year-by-year) is worth more than optimizing one direction.
Default to Traditional 401(k) — 100% of new contributions.
Your current 32-35% marginal rate is hard to beat in retirement, especially if you plan to retire to a low-tax state. Take the deduction now; convert in your low-income early-retirement years.
Plan Roth conversions during ages 60-72 (the "sweet spot") to manage future RMDs.
Traditional 401(k) + aggressive Mega Backdoor Roth if your plan allows after-tax contributions.
Take the 35-37% deduction on regular deferrals, then use after-tax-to-Roth in-plan conversions to fill up the $72K combined cap with Roth dollars. This is the tax-arbitrage move high earners with sophisticated plans can deploy.
Bottom line: The Roth-vs-Traditional decision is income-driven, not age-driven. The single most common mistake is mid-career high earners over-allocating to Roth because they read advice written for younger savers. Use the calculator above with your specific salary and projected retirement income to validate the tier recommendation.
It depends on whether your retirement tax rate will be higher or lower than your current marginal rate. Roth often wins if you expect higher taxes later; Traditional often wins if you want a current deduction and expect lower taxes in retirement.
The break-even rate is the future tax rate at which Traditional and Roth produce the same after-tax spendable wealth in this model, given your growth assumptions. Our calculator estimates it from your projected balances to help you build intuition.
Yes. Employee elective deferrals to Roth and Traditional share the same IRS dollar limits ($24,500 under age 50 in 2026, with higher catch-up amounts for eligible ages). Employer contributions count toward separate combined limits.
Many plans allow in-plan Roth conversions or rollovers to Roth IRAs. Conversions generally trigger ordinary income in the conversion year. Check your plan document and provider for allowed transactions and timing.
Employer matching contributions are typically made on a pre-tax basis to the Traditional portion of the plan, even when you elect Roth deferrals. Always verify with your summary plan description.
It projects the same nominal contribution rate for Traditional versus Roth over your working years, compounds monthly at your expected return, then compares Traditional balance after retirement taxes to Roth balance (tax-free when qualified).