Roth or Traditional 401(k)?
Assumptions on sliders · method reviewed September 7, 2026
Compares a Roth and a traditional 401(k) contribution at the same cost to your paycheck, at the tax rates you expect now and in retirement. AboutLess
In plain words. A traditional contribution skips tax today and pays it when the money comes out. A Roth contribution pays tax today and skips it later. If both cost you the same in take-home pay, they grow the same way, and the only difference is which tax rate applies. This tool grows both at the return and years you choose, taxes each at its rate, and shows what is left.
Why it matters. Most plans now offer both, and the choice is made on every paycheck for decades. The answer is not which account is better but which rate is higher, yours today or yours in retirement, and that is a guess worth making with the arithmetic in view.
An example. $10,000 a year at a 22% rate today and 12% in retirement, growing 25 years at 6%: the traditional account leaves about $37,768 after tax and the Roth, at the same take-home cost, about $33,477. The traditional account is ahead by about $4,292, and the two would tie at a 22% rate in retirement.
Where it stops. Both rates are guesses, and the one in retirement is the guess that decides it. The tool uses one flat rate on the withdrawals, one return for both accounts, and no state tax difference between now and later. It does not invest the tax a traditional saver defers, and it does not know what the law will say in thirty years. Everything it leaves out.
The amount you would put in each year. The plan limit for 2026 is $24,500 before any catch-up, and the tool caps at it.
Your top federal bracket, plus state tax. The federal brackets for 2026 run from 10% to 37%.
Your best guess. It is often lower than today's rate, because withdrawals fill the standard deduction and the low brackets first.
- Rate in retirement where the two tie
- 22%
- Today's rate. Below it the traditional account leaves more, above it the Roth does
- Full contribution into the Roth instead
- $42,919
- After tax at the end. It costs $2,200 more take-home each year than the traditional contribution
- What each dollar grows to
- $4.29
- At 6% for 25 years, in either account, before tax
The two rates decide the answer. The return and the years scale both accounts alike and do not change which one is ahead. The rate in retirement is a guess about a return filed decades from now. Withdrawals fill the standard deduction and the low brackets first, so the rate on them is often lower than the marginal rate today, unless a pension, a large balance, or required distributions push it up. Splitting between the two accounts hedges the guess, and most plans that offer a Roth option allow both.
This is an assumption tool, and both rates are yours to set. It holds the cost to your paycheck the same on each path, grows both at one return, and taxes the traditional withdrawal at one flat rate. It leaves out any employer match, which is pre-tax either way, state tax differences between now and retirement, the tax a traditional saver could earn by investing the deferred tax outside the plan, and changes in the law. Method reviewed September 7, 2026. Hypothetical; educational, not advice.
This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.
Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.