Roth vs Traditional 401(k) Calculator
One question decides this: is your tax rate higher now or in retirement? Everything else is arithmetic around it — and this runs that arithmetic both of the ways it can honestly be run.
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The comparison people usually get wrong
Put $10,000 into a traditional 401(k) and $10,000 into a Roth 401(k), grow both at the same rate for the same years, and the Roth ends up worth more after tax. That looks decisive and it is not, because the two contributions did not cost the same.
At a 24% marginal rate, the traditional $10,000 reduced your tax bill by $2,400. It cost you $7,600 out of pocket; the Roth cost the full $10,000. Comparing them as though they cost the same quietly hands the Roth an extra $2,400 a year of your money.
This page runs both comparisons and labels them, because both are answering real questions — they are just not the same question.
Same cost: the clean comparison
Hold the out-of-pocket cost equal and something striking happens. A $10,000 Roth contribution costs $10,000. The same $10,000 of after-tax money supports a traditional contribution of $10,000 ÷ (1 − 0.24) = $13,158, because the deduction gives $3,158 of it back.
Grow both and tax the traditional one on withdrawal, and the two are identical when the retirement rate equals the current rate. Not approximately — exactly. The commutative property of multiplication does the work, and no assumption about returns or time horizon changes it.
That is why the break-even is simply your current marginal rate. Expect a lower rate in retirement and traditional wins. Expect a higher one and Roth wins. Everything else is detail.
Same contribution: the comparison that matches behaviour
Most people do not gross up their traditional contribution. They pick a percentage, contribute it either way, and spend the tax saving.
Under that behaviour Roth wins even at equal tax rates, because the Roth contributor is effectively saving more. The calculator models the alternative too — investing the tax saving in a taxable account — and taxes its growth, which is what makes the comparison honest rather than rhetorical.
Untick the box and the traditional side loses the side account entirely. The gap that opens up is the cost of spending the refund, and it is usually larger than any plausible difference in tax rates.
Which rate is actually higher?
Arguments for a lower retirement rate: no salary, so income comes from withdrawals you control; no payroll tax; the standard deduction still applies; you can often manage the timing.
Arguments for a higher one: current rates are historically moderate and are set by future Congresses; a large traditional balance forces required minimum distributions whether you want the income or not; a pension or continued work can stack on top; and a surviving spouse files single on much the same income.
Nobody knows. The practical response is that having both is a hedge with real value — it gives you a choice about which account to draw from each year, and that flexibility is worth something no calculator can price.
A worked example
$12,000 a year for 25 years at 7%, a 24% rate now and 20% expected in retirement, with the tax saving invested and its gains taxed at 15%.
Same contribution: both accounts reach about $759,000. The traditional is worth $607,000 after 20% tax, and the invested tax savings add roughly $166,000 after tax, for $773,000. The Roth is worth $759,000. The traditional side is ahead by about $14,000 — but only because the tax saving was genuinely invested.
Same cost: the traditional contribution grosses up to $15,789, reaching about $999,000, worth $799,000 after tax against the Roth's $759,000. Traditional is ahead by $40,000, which is exactly what a four-point rate difference is worth over 25 years.
Set the retirement rate to 24% and the same-cost comparison lands on zero to the dollar. That is the break-even, and seeing it hit exactly is the clearest demonstration of what this decision actually turns on.
What this does not model
- The employer match. Matching contributions are traditionally pre-tax money taxed on withdrawal, even in a Roth 401(k). Whether a plan can direct the match to Roth depends on the plan.
- Required minimum distributions. They apply to traditional balances and force taxable income whether or not you need it.
- Contribution limits. The same dollar limit applies to both, so a maximum contribution to a Roth shelters more real money. The 401(k) calculator handles the limits.
- Bracket effects. A large withdrawal can push you into a higher band, and the calculator applies one flat rate.
- Social Security taxation and Medicare premiums. Both are income-tested, and traditional withdrawals count towards those tests.
For the IRA version of the same question, with its income limits, see the traditional vs Roth IRA calculator.
Frequently asked questions
Is a Roth 401(k) better than a traditional one?
Neither is better in general. Roth wins if your tax rate in retirement is higher than it is now; traditional wins if it is lower. At equal rates and equal out-of-pocket cost they are mathematically identical.
The tiebreakers are behavioural and structural: whether you would actually invest the tax saving, and whether having both kinds of money in retirement is worth the flexibility.
What is the break-even tax rate?
Your current marginal rate. Under the equal-cost comparison the two accounts land level when the retirement rate matches the rate you avoid today.
That is why the calculator reports it prominently: it turns an open-ended debate into one checkable question about your own future.
Does the employer match go into the Roth account?
Traditionally, no — matching contributions were pre-tax regardless of what the employee chose, and are taxed on withdrawal. Recent legislation permits plans to offer Roth treatment of employer contributions, but it is optional and not every plan does it.
Check your summary plan description. Either way the match is worth having; this only affects when it is taxed.
Should I split between Roth and traditional?
It is a defensible answer to a question nobody can settle. Having both gives you a choice each year in retirement about which account to draw from, which is worth real money in managing your taxable income.
It also hedges against being wrong about future rates, which is the honest reason most people should consider it.
Why does the Roth win when I untick the tax savings box?
Because the traditional contributor is then spending the deduction rather than saving it, so less money is going into retirement overall.
That is a real behavioural finding, not a quirk of the model. If you know you would spend the refund, Roth is effectively a forced higher savings rate.
Do contribution limits favour one of them?
Yes, and it is the strongest argument for Roth for a high earner maximising contributions. The same $24,500 limit applies to both, but $24,500 of Roth money is worth more in retirement than $24,500 of pre-tax money.
Someone contributing the maximum can therefore shelter more real value in a Roth than in a traditional account.
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This calculator is provided for general educational and estimation purposes only and is not tax, investment, or retirement advice. Future tax rates depend on future law and on your circumstances then, neither of which is knowable. Treat the result as a way of testing assumptions rather than as a recommendation.