Retirement
Roth vs Traditional 401(k) Calculator
The whole question is one comparison: your tax rate now against your tax rate in retirement. Roth pays the tax today and withdraws tax-free; traditional deducts today and pays tax later. When the rates are equal and you invest the traditional tax break, it is nearly a wash.
Lower if you expect less income; higher if you expect rates to rise or to keep earning.
Roth wins by
$46,412
After the tax each path eventually pays, measured at retirement.
With equal tax rates and the tax savings invested, the two are almost identical — Roth edges ahead only because the side account owes some tax on its growth. The real decision then rests on flexibility: Roth has no RMDs and hedges against rising rates.
- Roth balance (tax-free)
- $1,889,216
- Traditional after withdrawal tax
- $1,435,804
- Taxable side account
- $407,000
- Traditional total value
- $1,842,804
The traditional tax break, invested.
How this calculator works
Both accounts receive the same contribution and grow at the same return to the same pre-tax balance. The traditional balance is then reduced by the retirement tax rate. When the tax savings are invested, the annual saving (contribution × current rate) grows in a taxable side account, with its growth taxed at a long-term capital gains rate, and is added to the traditional side so no path is handed extra money.
Flat tax rates stand in for progressive brackets on both sides — in reality withdrawals fill brackets from the bottom, which tends to favour traditional. The value of Roth's missing RMDs, its hedge against rising rates, and estate benefits are real but not modelled. Contribution limits are not enforced.
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Frequently asked questions
Should I choose a Roth or traditional 401(k)?
Compare your tax rate now with your expected rate in retirement. If you expect a lower rate later — common for high earners near their peak — traditional usually wins. If you expect a higher rate, or you are early-career with a low rate and decades of growth ahead, Roth usually wins.
Why is it a wash when tax rates are equal?
Because multiplication is commutative. Deducting at 24% and being taxed at 24% later gives the same result as paying 24% now and withdrawing tax-free — provided you invest the tax the traditional route saved you. If you spend that saving instead, Roth wins, because you effectively sheltered more.
Does the employer match go into the Roth?
Historically the match always went into a traditional (pre-tax) account regardless of your choice. Since SECURE 2.0, plans may offer a Roth match if you elect it, in which case it counts as taxable income in the year received. Check what your plan does.
What about required minimum distributions?
Traditional 401(k)s force withdrawals from age 73. As of 2024, Roth 401(k)s no longer have RMDs for the original owner, matching Roth IRAs. That flexibility — leaving the money untouched and tax-free — is a real advantage the balance comparison alone does not capture.
Can I contribute to both?
Yes. You can split contributions between Roth and traditional within the same plan, up to the shared annual limit. Doing so hedges against not knowing your future tax rate and gives you both taxable and tax-free money to draw from in retirement, which helps manage brackets later.
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Traditional IRA Calculator
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See what raising your 401(k) contribution actually costs your take-home pay once the tax break and the employer match are counted.
Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.