Roth vs Traditional 401k Calculator
Compare Roth 401k and Traditional 401k side-by-side to determine which strategy maximizes your retirement savings based on your current and projected tax rates.
Your Information
Quick Analysis
Roth
Strong advantage
Advantage
$102,966
↓ See full analysis below
Current Tax Situation
Marginal Federal Rate
24%
Effective Federal Rate
13.17%
State Tax Rate
0%
Recommendation
Roth 401k
At Retirement
$102,966
Roth wins by
Strong Roth advantage. Based on your current and projected retirement tax rates, Roth 401k contributions will leave you with significantly more after-tax money.
| Metric | Roth 401k | Traditional 401k |
|---|---|---|
| Balance at 65 | $1,121,767 | $1,121,767 |
| Less: Taxes at Retirement | $0 | $102,966 |
| After-Tax Value | $1,121,767 | $1,018,801 |
| Required Minimum Distributions | None | None |
| Tax Savings This Year | $0 | $1,680 |
Understanding the Breakeven Rate
The breakeven retirement tax rate is the key threshold in the Roth vs Traditional decision.
If your retirement tax rate is lower than this percentage: Roth wins because you pay taxes now at a higher rate, but avoid taxes in retirement at a lower rate.
If your retirement tax rate is higher than this percentage: Traditional wins because you avoid taxes now and defer to retirement, spreading withdrawals across many years at lower rates.
The rate depends on: Your current marginal rate, how much you accumulate, and your expected retirement withdrawals and other income.
How Roth 401k Works
- •Tax-free contributions: You contribute after-tax dollars (no immediate deduction).
- •Tax-free growth: Earnings grow tax-free for decades.
- •Tax-free withdrawals: All withdrawals in retirement are completely tax-free.
- •No RMDs: Roth 401k has no Required Minimum Distributions (post-SECURE 2.0).
- •No income limits: Unlike Roth IRA, Roth 401k is available to all income levels.
How Traditional 401k Works
- •Tax-deductible contributions: Contributions reduce your taxable income immediately.
- •Tax-deferred growth: Earnings grow without annual tax.
- •Taxed in retirement: Withdrawals are taxed as ordinary income.
- •RMDs required: Starting at age 73, you must withdraw a minimum amount annually.
- •Immediate tax savings: You save taxes at your current marginal rate.
When Roth Makes Sense
- ✓You're early in your career (lower current tax rate)
- ✓You expect significantly higher income in the future
- ✓You're in a low tax bracket this year
- ✓You want the flexibility of no RMDs in retirement
- ✓You want to leave tax-free money to heirs
When Traditional Makes Sense
- ✓You're in a high tax bracket now
- ✓You expect lower income or tax brackets in retirement
- ✓You need the immediate tax deduction
- ✓You plan to retire in a low-tax state
- ✓You want to minimize current taxable income
SECURE 2.0 Act Changes (2026)
Roth 401k RMDs Eliminated: Starting in 2026, Roth 401k accounts no longer require Required Minimum Distributions, making them significantly more attractive for wealth building and legacy planning.
Super Catch-Up (Ages 60–63): Employees age 60–63 can now contribute an additional $11,250 annually on top of the standard limit, allowing accelerated catch-up for those nearing retirement.
Higher RMD Age: The RMD start age increased to 73 (from 72). It's scheduled to reach 75 in 2033.
Frequently Asked Questions
Can I have both Roth and Traditional 401k?
Your employer's 401k plan may offer both Roth and Traditional options. If so, your contributions are split between them, and the combined total cannot exceed the annual limit. Many advisors recommend a "barbell" approach: contribute a higher percentage to whichever type has the stronger advantage based on your situation, or split strategically based on tax optimization.
What about Roth IRA vs Roth 401k?
Roth IRA contributions are limited ($7,000/year in 2026, or $8,000 if 50+) and have income phase-outs (not available to high earners). Roth 401k has no income limits and much higher contribution limits ($24,500 base, up to $35,750 with super catch-up). If you earn too much for a Roth IRA, a Roth 401k is your way to make large Roth contributions.
How are Roth 401k conversions different from contributions?
Roth 401k contributions are new after-tax money. A Roth conversion moves money from a Traditional IRA or Traditional 401k to a Roth account—this triggers immediate income tax on the converted amount. Both are useful strategies; conversions are popular in low-income years (sabbaticals, between jobs, early retirement before RMDs).
How do Required Minimum Distributions (RMDs) affect my choice?
Traditional 401k and IRA holders must take RMDs starting at age 73 (rising to 75 by 2033), whether they need the money or not. These withdrawals are taxed and can push you into higher brackets or affect Medicare premiums. Roth 401k (post-SECURE 2.0) has no RMDs, giving you complete control over withdrawals and making it superior for wealth building and legacy planning.
Should I consider my state taxes?
Absolutely. Some states have no income tax, some fully exempt retirement income, and others tax it like ordinary income. If you plan to retire in a low-tax state (TX, FL, NV, PA, IL), Traditional becomes more attractive since you save taxes now at your home state's rate. If retiring in a high-tax state (CA, NY, OR), Roth becomes more attractive. Use this calculator's state selector to account for this.
What if I can't decide between Roth and Traditional?
A "barbell" approach combines both strategies: contribute the minimum to Traditional (to get the immediate tax deduction) and put any remaining capacity into Roth. This hedges tax uncertainty, gives you diversified tax treatment in retirement, and lets you cherry-pick the lower-tax withdrawals each year in retirement. It's especially useful when the calculator shows "Split" as the recommendation.