Roth vs Traditional 401(k) Calculator
Put both accounts side by side. See how much take-home pay you give up today, what each balance looks like at retirement, and the break-even tax rate that picks the winner.
Annual Salary
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Pay Frequency
Contribution Rate
Your Timeline
Marginal Tax Rate Today
Expected Tax Rate in Retirement
Expected Annual Return
Traditional 401(k)
Roth 401(k)
Roth wins if your retirement tax rate is above the break-even. Traditional wins if it's below.
Plan Every Paycheck, Every Year
Track contributions, overtime, bonuses, and state taxes all year with the full Pay44 app.
Roth vs Traditional 401(k): How Each Is Taxed
The real difference between a Roth and a Traditional 401(k) comes down to when you pay the tax. Everything else follows from that one choice.
- Traditional 401(k): Your contribution comes out of your paycheck before income tax is calculated. The money grows tax-deferred, and every dollar you withdraw in retirement is taxed as ordinary income.
- Roth 401(k): Your contribution comes out after income tax. The money grows tax-free, and qualified withdrawals (age 59½ plus a 5-year holding period) are completely untaxed.
FICA (Social Security + Medicare) is withheld on the full gross before the 401(k) deduction either way. Neither account lets you skip that 7.65%.
2026 Contribution Limits at a Glance
| Age group | Base limit | Catch-up | Total employee limit |
|---|---|---|---|
| Under 50 | $24,500 | — | $24,500 |
| 50–59 | $24,500 | $8,000 | $32,500 |
| 60–63 (super catch-up) | $24,500 | $11,250 | $35,750 |
| 64 and up | $24,500 | $8,000 | $32,500 |
Source: IRS Notice, 401(k) limit increases to $24,500 for 2026. The $11,250 super catch-up for ages 60–63 comes from SECURE 2.0. Starting in 2026, if your prior-year Social Security wages exceed $150,000, all catch-up contributions must be made as Roth.
When Roth Beats Traditional
Roth wins when your retirement tax rate is higher than your current rate. Classic scenarios:
- Early-career workers in the 10–12% brackets who expect to earn more later
- Anyone who thinks federal income tax rates will rise nationally
- Savers who want a tax-diversified retirement (some pre-tax, some tax-free)
- High earners filling up Roth space before Roth catch-ups become mandatory
Traditional wins when your retirement tax rate is lower than your current rate:
- Peak earners in the 32–37% brackets today who plan to retire in the 12–22% range
- Workers planning to retire in a no-income-tax state (TX, FL, NV, WA, SD, WY, TN, AK)
- Anyone who needs the pre-tax paycheck boost to afford contributing in the first place
The Break-Even Tax Rate (BETR)
If you put the same percent of gross salary into either account, Roth and Traditional produce identical after-tax wealth only when your retirement tax rate equals your current rate. That's the break-even rate. Above it, Roth wins. Below it, Traditional wins.
Vanguard popularized a more nuanced version of this math (the "BETR" framework) that accounts for the tax savings a Traditional contributor could invest in a taxable side account. The simple version works fine for most decisions. Use the advanced version if you're maxing out contributions and investing the tax savings separately.
What About the Employer Match?
The employer match is free money, and you should never leave it on the table. Historically, matches always went into a pre-tax (Traditional) bucket no matter what the employee elected. SECURE 2.0 now allows plans to offer Roth matching, but it's optional, the match is taxable to you in the year it's made, and it must be 100% vested immediately. Assume pre-tax unless your plan explicitly offers Roth matching.
Want to see how the match affects your paycheck? Try our 401(k) Contribution Calculator for a full breakdown including employer match math.
Frequently Asked Questions
Common questions about choosing between Roth and Traditional 401(k)
Is Roth or Traditional 401(k) better?
It depends on whether you expect a higher or lower tax rate in retirement than you have today. A higher future rate favors Roth (pay taxes now at a lower rate). A lower future rate favors Traditional (defer taxes now, pay less later).
What is the 2026 401(k) contribution limit?
$24,500 for employees under 50. Add $8,000 in catch-up if you're 50 or older, or $11,250 "super catch-up" if you're 60–63, under SECURE 2.0.
How is the break-even tax rate calculated?
It's the retirement tax rate at which after-tax income from a Traditional withdrawal equals tax-free income from a Roth. If your actual retirement rate exceeds it, Roth wins.
Can I contribute to both Roth and Traditional 401(k)?
Yes. The $24,500 limit is shared across both buckets, but you can split your contribution any way you choose as long as your plan allows Roth deferrals.
Do employer matches go into the Roth 401(k)?
Historically no: matches always went into a pre-tax bucket. SECURE 2.0 now allows plans to offer Roth matching (optional), in which case the match is taxable to you in the year it's made and must be 100% vested immediately.
What happens to a Roth 401(k) when you retire?
Qualified distributions (age 59½ plus the 5-year holding period) are completely tax-free: no federal, no state, no tax on growth. Starting in 2024, Roth 401(k)s are no longer subject to lifetime RMDs.
Is the SECURE 2.0 super catch-up Roth-only?
Not automatically. But starting in 2026, if your prior-year Social Security wages exceed $150,000, all catch-up contributions (regular or super) must be made as Roth.
When should I choose Traditional over Roth?
When you're in a high-tax year and expect to retire in a lower-tax state or bracket. The deferred tax is worth more than the tax-free growth you'd lose on the Roth side.
Need More Than a Quick Calculation?
The full app tracks your full paycheck all year — overtime, bonuses, deductions, and 50-state taxes built in.