How this Roth vs Traditional 401(k) calculator works
The same annual contribution goes into a Roth and a Traditional account, both grow at the same return, and both are measured the only way that's honest: after tax. The Roth balance at retirement is already fully yours. The Traditional balance is taxed at your expected retirement rate — and because contributing pre-tax also saves you tax today, the calculator (by default) invests that annual tax saving in a taxable side account and adds its after-tax value to the Traditional column. Skip that step and the comparison silently rigs itself for Roth, which is exactly what most quick comparisons get wrong.
The chart makes the core trap visible. Both account bars are the same height — same contributions, same growth — but the Traditional bar has a red slice: tax still owed. A $1.38 million Traditional statement at a 22% retirement rate is really $1.08 million of yours and $300,000 of the IRS's. The blue segment stacked on the Traditional side is the reinvested tax savings — the part of the Traditional deal people forget to count in its favor.
Tax now or tax later: the mechanic
Strip away the jargon and the two accounts differ by one thing — when the IRS takes its slice of the same stream of money:
Roth: (income − tax now) × growth
Traditional: income × growth − tax later
Multiplication doesn't care about order. If the tax rate is identical on both ends, the two lines produce exactly the same after-tax result — $10,000 taxed at 24% and then tripled equals $10,000 tripled and then taxed at 24%. This surprises almost everyone, and it means the entire Roth-vs-Traditional decision collapses to a single question: will your tax rate be higher now, or when you withdraw? Pay the toll on whichever side of the bridge is cheaper.
Everything else is second-order adjustment. The side account drags the Traditional result down slightly (its growth is taxed along the way, so the tie-breaker leans Roth). The shared contribution limit quietly favors Roth for maxers-out — $24,500 of Roth is more real purchasing power than $24,500 pre-tax. RMDs and the Roth IRA's penalty-free access to contributions add flexibility points to the Roth side; state-tax arbitrage for people who'll retire somewhere cheaper adds real dollars to the Traditional side.
Why the rate assumption drives the whole answer
Because the mechanic is symmetric, your two rate inputs aren't just parameters — they are the answer, and the honest version of each is subtler than it looks. Your "rate now" is genuinely your marginal rate: a Traditional contribution deducts from the top of your income, saving tax at your highest bracket (plus state tax, if any). But your retirement rate should usually be an effective rate, not a marginal one: withdrawals fill the brackets from the bottom — standard deduction first, then 10%, then 12% — so a retiree whose top bracket is 22% might pay only 10–15% on the actual withdrawal dollars. Plugging your current bracket into both fields overstates the Roth case; many mid-career savers are surprised to find Traditional winning once they model the retirement rate honestly.
The breakeven rate in the results strip condenses this: it's the retirement tax rate at which the two accounts tie at your inputs. Land below it and Traditional wins; above it, Roth. The sensitivity table beneath the chart runs the same comparison across a range of retirement rates so you can see how much daylight there is — often the margin is small enough that the flexibility arguments matter more than the arithmetic.
The case for both
The whole decision rests on predicting your income and Congress's tax code decades out — two things nobody can predict. That's why tax diversification is a legitimate strategy rather than indecision: split contributions between the buckets, and in retirement you get to choose each year which one to draw from — Traditional up to the top of the low brackets, Roth for everything above — engineering a blended rate lower than either account alone could deliver. A common-sense default: Roth in low-earning years (early career, sabbaticals, grad school), Traditional in peak-earning years, and always enough 401(k) contributions to capture the full employer match, whatever its tax flavor.
This calculator deliberately models the core mechanic, not the full tax code: employer matches, RMD schedules, Social Security taxation thresholds, ACA subsidy cliffs, IRA deduction phase-outs, and conversion strategies are all real and all out of scope. For the growth half of the picture, the multi-phase compound interest calculator shows what those contributions actually build over shifting life phases — and once you know your target, the Coast FIRE calculator tells you when your balance no longer needs feeding at all.
Frequently asked questions
What's the difference between Roth and Traditional?
Timing of the tax. Traditional: deduct now, pay income tax on withdrawals. Roth: pay tax now, withdraw everything — growth included — tax-free. Same investments, same limits, different end of the bridge.
Which is better?
Whichever side of the timeline has the lower tax rate. Higher bracket now than in retirement → Traditional. Lower now → Roth. Uncertain → split.
What if my rate is the same now and later?
They tie exactly — tax-then-grow equals grow-then-tax. In practice Roth edges ahead slightly because Traditional's reinvested tax savings suffer tax drag in a taxable account.
What does the breakeven rate mean?
The retirement tax rate where both accounts produce identical after-tax balances at your inputs. Below it Traditional wins, above it Roth wins. It typically sits just under your current marginal rate.
What are the 2026 contribution limits?
401(k): $24,500 ($32,500 at 50+, with an $11,250 catch-up for ages 60–63). IRA: $7,500 ($8,600 at 50+). Roth and Traditional share the limit — which favors Roth if you max out.
Can I contribute to both?
Yes — split 401(k) deferrals in any ratio within the single limit, and hold both IRA types within the IRA limit. Splitting is the standard hedge against unknowable future tax rates.
What about the employer match?
Matching dollars traditionally go in pre-tax regardless of your election (some plans now offer Roth matching under SECURE 2.0). Either way: always capture the full match before optimizing tax treatment.
Do Roth accounts have RMDs?
No — Roth IRAs never did, and Roth 401(k)s haven't since 2024. Traditional accounts force taxable withdrawals from age 73 (75 for those born 1960+), which is a real late-life argument for Roth.
Marginal vs effective rate — why does it matter?
Contributions save at your top (marginal) rate, but withdrawals fill brackets from the bottom, so the retirement rate on those dollars is often much lower. Using your current bracket for both inputs overstates Roth.
What if I earn too much for a Roth IRA?
2026 phase-outs: $153k–$168k single, $242k–$252k joint. Above that, the backdoor Roth conversion route remains, and Roth 401(k)s have no income limit at all.
What are the early-withdrawal differences?
Roth IRA contributions come out anytime, tax- and penalty-free. Traditional money before 59½ generally costs income tax plus 10%. Roth earnings need age 59½ plus a five-year-old account.
Are state taxes handled?
Only via the rates you enter. Contributing in a high-tax state and retiring in a no-tax state is a strong Traditional argument — build it into your two rate inputs deliberately.
Why does Traditional look bigger but end up worth less?
Its statement shows pre-tax dollars with an embedded IRS claim. $1M Traditional at a 22% retirement rate is $780k yours, $220k deferred tax. Roth statements are already net. Never compare the raw balances.
This calculator is an estimate for education, not tax or investment advice. It models flat marginal rates you choose — not full bracket math, employer matches, RMDs, Social Security taxation, state-by-state rules, or future tax law. Confirm your strategy with a CPA or fee-only advisor.