Free Roth vs Traditional 401(k) calculator. Compare after-tax retirement wealth by contributing pre-tax (Traditional) or after-tax (Roth) based on your current and future tax rates.
The Roth 401(k) vs Traditional 401(k) Calculator compares the after-tax retirement wealth produced by each option. The fundamental difference: Traditional contributions are pre-tax (reducing your taxable income now, taxed at withdrawal) while Roth contributions are after-tax (no deduction now, but tax-free withdrawals in retirement).
The key variable is whether your tax rate will be higher or lower in retirement. If you expect higher taxes later, Roth wins. If lower, Traditional wins. In practice, the optimal choice depends on your current marginal rate, expected retirement rate, investment horizon, and whether you can invest the Traditional tax savings.
Enter your income, contribution amount, tax rates, and time horizon to see which option produces more after-tax wealth at retirement. The decision depends heavily on your current tax bracket, expected retirement income, state tax rules, and how long you plan to let the account grow. Running both scenarios side by side eliminates guesswork and reveals the optimal strategy.
Choosing between Roth and Traditional 401(k) is one of the most impactful retirement decisions. This calculator quantifies the after-tax difference so you can make a data-driven choice rather than guessing. Even a small tax rate difference compounded over 25+ years can mean tens of thousands of dollars. This clarity is especially valuable during open enrollment when you need to commit to a contribution strategy.
Traditional: After-Tax = Contribution × (1 + return)^years × (1 − retirement tax rate) Roth: After-Tax = Contribution × (1 − current tax rate) × (1 + return)^years With Tax Savings Invested: Traditional + (Contribution × current tax rate) × (1 + return × (1 − cap gains rate))^years × (1 − cap gains rate)
Result: Traditional after-tax: $84,497 | Roth after-tax: $82,573
Contributing $20,000/year for 25 years at 7% grows to $1,353,181. Traditional: taxed at 22% withdrawal = $1,055,481 after-tax. Roth: $20,000 minus 24% tax = $15,200 effective contribution, growing tax-free to $825,734. But if Traditional tax savings ($4,800/year) are invested in a taxable account, total Traditional after-tax wealth is approximately $1,084,497, making Traditional slightly better when the retirement rate is lower.
The decision between Roth and Traditional hinges on one question: will your marginal tax rate be higher or lower in retirement? If you're currently in the 22% bracket and expect to withdraw in the 12% bracket, Traditional saves you 10 percentage points on every dollar. Conversely, if you're in the 12% bracket now but expect 22% in retirement, Roth saves you 10 points.
Many financial planners recommend a split approach: contribute to Traditional in high-income years and Roth in lower-income years. Having both buckets in retirement gives you flexibility to manage taxable income — withdraw from Traditional up to a tax bracket threshold, then take additional needs from Roth tax-free to avoid jumping brackets.
Roth 401(k) has advantages beyond the tax rate comparison. Roth balances don't count as taxable income in retirement, which can reduce Medicare premiums (IRMAA), Social Security taxation, and overall tax bracket exposure. These indirect benefits are harder to quantify but can be substantial for retirees with large Traditional balances.
Roth is better when your retirement tax rate will be higher than your current rate. This is common for young professionals early in their career, people who expect significant income growth, or those who believe tax rates will increase broadly. Roth also provides tax-free withdrawals, offering more flexibility in retirement.
Traditional is better when your current tax rate is higher than your expected retirement rate. This is typical for peak earners in mid-to-late career, those planning to retire in a low or no income tax state, or those who need the immediate tax deduction. The tax savings can be invested or used for other financial goals.
If you invest the tax savings from Traditional contributions in a taxable brokerage account, Traditional often wins even when rates are equal, because you're investing more total dollars. However, the taxable account incurs capital gains taxes, reducing this advantage. This calculator includes a "tax savings invested" scenario.
Yes! Most employers that offer Roth 401(k) allow you to split contributions between Roth and Traditional. The combined total cannot exceed the annual limit ($23,500 in 2025). Many financial advisors recommend contributing some to each for tax diversification.
Employer matching contributions always go into the Traditional (pre-tax) account, even if your own contributions are Roth. This means you'll always have some Traditional 401(k) balance regardless of your election. Starting in 2024, SECURE 2.0 allows employers to offer Roth matching contributions.
Yes, qualified Roth 401(k) distributions are completely tax-free — both contributions and earnings. To qualify, you must be 59½ or older and the account must have been open for at least 5 years. Non-qualified early withdrawals have earnings taxed as income plus a 10% penalty.