Roth vs Traditional 401(k) Calculator
Compare a Roth 401(k) against a traditional 401(k) at equal out-of-pocket cost, including the up-front tax saving most calculators leave out.
How this is calculated
Equal out-of-pocket cost. Deferring C to a traditional 401(k) reduces your take-home by C × (1 − your current tax rate) and hands you C × your current tax rate back in tax. Total money leaving your pocket is C, the same as contributing C to a Roth. So the honest comparison invests that tax saving in a taxable account. We track its cost basis and tax only the gain at your capital gains rate on exit, plus a small annual drag on the dividend share of return. Omitting this side account is the single most common error in free Roth-versus-traditional tools and it biases every result toward Roth.
Employer match. Matching contributions are pre-tax unless your plan has adopted the SECURE 2.0 option to pay the match as Roth, which most have not. True even when you defer to Roth. They grow in a separate traditional bucket and are taxed at your retirement rate in both scenarios.
Contribution timing. Contributions are assumed to arrive evenly through the year, so each year's new money earns about half a year of return.
Statutory caps. Employee contributions are capped at the IRC §402(g) limit for your age, including the age-50 catch-up and the ages 60–63 super catch-up. Compensation is capped at the IRC §401(a)(17) limit.
What this does not model. State income tax, IRMAA surcharges on Medicare premiums, the net investment income tax, required minimum distributions, and the SECURE 2.0 rule requiring catch-up contributions to be Roth for higher earners. Returns are a single fixed rate. Real markets vary, and sequence of returns matters.
Why this calculator disagrees with the others
Put a dollar into a traditional 401(k) and two things happen on the same payslip. Your take-home drops. And a slice of tax you'd have paid this year doesn't get paid. Defer C at a marginal rate of t and the paycheck shrinks by C × (1 − t), while C × t stays with you. Add those two together and C has left your pocket, which is exactly what a Roth contribution of C costs.
So a fair comparison has to do something with the tax that never got paid. Leave it in the current account and it gets spent on nothing in particular, and at that point you're no longer comparing two retirement plans, you're comparing a plan against the same plan with a cash gift thrown away. Both of the sites currently ranking for this search skip the step, and as far as I can tell the error runs the same direction every time. Always toward Roth.
with the side account : Roth $879,902 | Traditional $879,902 without it (the others) : Roth $879,902 | Traditional $668,726
Same inputs in both rows: 30 years, a $90,000 salary, a 10% deferral, and one tax rate before and after retirement. Drop the side account and a $211,177 lead for Roth appears from nowhere.
How do you compare Roth and traditional at equal cost?
Make the same total leave your pocket on both sides, which means the traditional column has to invest the tax it just saved instead of spending it. Six steps. The figures are the ones in the box above: a flat $90,000 salary, a 10% deferral, 30 years, and one 24% tax rate before and after retirement.
- Find the deferral. 10% of $90,000 is $9,000 a year.
- Roth side: $9,000 of already-taxed pay goes into the plan, and take-home drops by the whole $9,000.
- Traditional side: the same $9,000 goes in before tax, so at 24% take-home drops by $6,840.
- Take the difference. $9,000 less $6,840 is $2,160 of tax you didn't pay, and until that $2,160 goes somewhere the two sides haven't cost the same.
- Pay the $2,160 into a taxable account each year and record it as cost basis. Grow both sides at 7% a year for the 30 years.
- Tax the two ends. The traditional 401(k) balance gives up 24% on withdrawal; the side account hands its basis back untaxed and is taxed only on the growth, which costs nothing here because the capital gains rate is set to zero; the Roth balance pays nothing at all. Add the traditional balance to the side account and you get $879,902, which is exactly what the Roth column comes to.
That equality is the whole test, and it's why step 4 isn't optional. The same slip is easy to make by hand: you compare a $9,000 Roth contribution with a $9,000 traditional contribution, notice the traditional one only cost $6,840 out of your pay, and then never do anything with the $2,160 difference.
Leave step 4 out and the traditional column finishes at $668,726 instead, which hands Roth a $211,177 lead that came from nothing but a discarded tax saving.
The test this calculator has to pass
There's one identity everything else hangs on. Make the retirement rate equal to today's rate, take every bit of tax friction out of the side account, and Roth and traditional have to finish on the same figure, to the cent. Not close. Equal. Whether the tax comes off before the money grows or after it has grown makes no difference, because you're multiplying the same factors in a different order and a product doesn't care about order.
Try it above. Set both tax rates to one number, put the capital gains rate at zero, and the two columns match. Now push the capital gains rate back up and Roth edges ahead, which is the right answer: a taxable side account loses a little to tax every year and a 401(k) doesn't. That same drag is why the break-even rate the tool reports sits a shade under your current marginal rate instead of exactly on it. If you can find inputs where the equal-rate test fails, the calculator is wrong, not the arithmetic.
Where this tool is stricter than the free ones
- The employer match stays pre-tax in both columns. It's modelled as its own traditional bucket, taxed at your retirement rate whichever way you defer, so it lifts both totals by the same amount and never tips the comparison.
- The caps are enforced, not just described. Your deferral stops at the IRC §402(g) limit for your age: $24,500 in 2026, $32,500 from age 50, and $35,750 between ages 60 and 63. Compensation above the §401(a)(17) limit doesn't count.
- The side account keeps a cost basis. Only the gain is taxed on exit, at the capital gains rate you enter, and the dividend share of return loses a little each year along the way.
- Two ways to compare. Equal out-of-pocket cost is the default and the fair one. Equal take-home pay is there for anyone who'd sooner hold their paycheck steady and let the contribution sizes differ.
A single average return hides the thing that decides retirements
Returns here are one fixed 7%. Real markets aren't, and a bad run early in retirement does far more damage than the same run late, which is why the homepage spends a section on sequence-of-returns risk and this page doesn't.
This page compares the two halves of one 401(k). If your actual choice is between a Roth 401(k) and a Roth IRA, you're looking at a different account with a far smaller limit and an income test, plus a rule that lets you take your own contributions back early, and that comparison lives on Roth 401(k) vs Roth IRA. Every ceiling that applies to either is on the contribution limits page.
And if you're still working out what a pre-tax and a Roth deferral even are, start with the plain explainer—same limit and same match, with the only difference being which year the tax bill falls in.
Frequently asked questions
How do I read the break-even rate this calculator reports?
As a margin, not as a verdict. The number the tool prints is the retirement tax rate at which the two columns finish level, so the useful question isn't which side wins, it's how far your own guess would have to be wrong before it crossed that line. A break-even sitting a point away from the rate you expect means the choice is close to a coin toss. One sitting well clear of it means traditional has room to absorb a bad forecast, and nobody forecasts their own bracket decades out well.
Does the employer match go into the Roth side?
No. Unless your plan has adopted the SECURE 2.0 Roth match and you've elected it, matching money is a pre-tax employer contribution, and it stays that way when your own deferrals are Roth. The tool holds it in a traditional bucket and taxes it at your retirement rate in both columns. Plenty of free tools get this wrong.
Why do other 401(k) calculators give a different answer?
Because most of them never invest the tax the traditional plan saves you, so Roth looks better than it is, by a margin that grows with the number of years you model. Here the saving goes into a taxable side account with a tracked cost basis. Only the gain is taxed. Cost basis comes out clean.
What is the break-even retirement tax rate?
The retirement tax rate at which both columns land on the same figure: under it, traditional wins; over it, Roth wins. It sits slightly below your current marginal rate instead of exactly on it, because the taxable side account pays a little tax along the way and the 401(k) pays none until withdrawal.
How much can I contribute in 2026?
$24,500 in employee deferrals, the IRC §402(g) figure. From the year you turn 50 a catch-up lifts that to $32,500, and between ages 60 and 63 a larger catch-up lifts it to $35,750. Enter more than your age allows and the tool quietly caps it.