The Roth 401k vs Traditional 401k comparison calculates whether paying taxes now (Roth) or deferring them to retirement (Traditional) saves you more money. Enter your income, tax rates, and contribution amount to find your break-even point.
Roth vs Traditional: Key Differences
| Feature | Roth 401k | Traditional 401k |
|---|---|---|
| Contributions | After-tax dollars | Pre-tax (reduces taxable income now) |
| Withdrawals in Retirement | 100% tax-free | Taxed as ordinary income |
| Required Minimum Distributions | None (if rolled to Roth IRA) | RMDs start at age 73 |
| Best For | Lower tax rate now than retirement | Higher tax rate now than retirement |
| 2026 Contribution Limit | $23,500 (combined) | $23,500 (combined) |
| Income Limits | None | None |
Tax Comparison Calculator
Roth 401k
after-tax annual contribution
Traditional 401k
tax saved this year
Roth 401k vs Traditional 401k: Which Is Better?
The Roth vs Traditional 401k decision is fundamentally about whether you expect to pay a higher tax rate now or in retirement. If your current tax rate is higher, Traditional wins — you defer taxes to a lower rate later. If retirement tax rates will be higher, Roth wins — you lock in today's lower rate.
When Roth 401k wins
Roth is advantageous when you're early in your career (lower income now, higher later), when you expect significant income in retirement from multiple sources, or when you want to hedge against future tax rate increases. All growth is tax-free — a $10K contribution that grows to $100K means $90K of gains you never pay taxes on.
When Traditional 401k wins
Traditional wins in peak earning years when you're in the 32-37% bracket and expect to be in 22-24% in retirement. A $10,000 Traditional contribution saves $3,200-3,700 in taxes today. Even if you pay 22% on withdrawals in retirement, you came out $1,000-1,500 ahead per $10K contributed.
Frequently Asked Questions
Is this Roth vs Traditional calculator free?
Yes, completely free with no signup required.
What is the key difference between Roth and Traditional 401k?
Traditional 401k contributions are pre-tax — you reduce your taxable income now and pay taxes when you withdraw in retirement. Roth 401k contributions are after-tax — you pay taxes now but all withdrawals in retirement (including growth) are tax-free. The choice is essentially: do you expect your tax rate to be higher now or in retirement?
Who should choose Roth 401k?
Roth generally wins if you expect your retirement tax rate to be equal or higher than your current rate. This applies to: young people early in their careers (lower income now, higher later), those who expect significant income in retirement, and those who want to hedge against future tax rate increases. If your employer matches, the match always goes into traditional regardless of your election.
What are the 2026 401k contribution limits?
For 2026, the 401k contribution limit is $23,500 ($31,000 for those 50+). This limit applies to the combined total of Roth and Traditional contributions. Employer matching contributions don't count toward this employee limit. The total contribution limit (employee + employer) is $70,000.
Can I have both Roth and Traditional 401k?
Yes — if your employer's plan allows both, you can split contributions between Roth and Traditional in any combination, as long as the total doesn't exceed $23,500. This 'tax diversification' strategy gives you flexibility in retirement to withdraw from the most tax-efficient account based on your income that year.