Retirement scenarios

Traditional vs Roth 401(k) Calculator

Compare after-tax retirement values using the same employee contribution, employer match and investment return. Explore how investing today's tax savings changes the result.

Equal employee contributions

Your assumptions

For a 50% match on contributions up to 6% of pay, enter 50 and 6. The current tax rate is your assumed average incremental federal/state income-tax saving on the contribution; it is not inferred from income. Payroll taxes are not reduced in this model.

What happens to traditional tax savings?

Investing the entire tax saving makes take-home costs equal. Spending it lowers traditional's current cost; that consumed money is excluded from retirement wealth. Annual tax drag uses return × (1 − tax rate) when returns are positive. Deferred treatment taxes only positive gains at the end, not deposited savings.

Retirement combined withdrawal tax rates

Use effective combined rates on the modeled pre-tax withdrawals. These are scenarios, not predictions or tax advice.

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How the comparison works

Monthly deposits occur at month end. Employee contributions, employer match and any invested tax savings are divided into 12 equal deposits per year. Annual returns are effective rates converted to monthly factors using (1 + annual return)^(1/12). Income, contributions, tax rates and returns remain constant; all starting balances are zero.

Employer match = match rate × the smaller of employee contribution and the matched percentage of eligible compensation. Traditional after-tax wealth = (employee balance + match balance) × (1 − retirement tax rate) + taxable savings after tax. Roth after-tax wealth = employee Roth balance + match balance × (1 − retirement tax rate).

Tax savings deposited into the taxable account create cost basis. Deferred-gain tax applies only to the positive difference between final account value and that basis. The annual-tax model instead uses a simplified net growth rate throughout; it assumes all positive return is taxed annually and does not charge a second terminal tax. Neither model gives a tax credit for losses or separately models dividends, turnover, tax lots or capital-loss carryforwards.

Positive differences favor Roth in the modeled retirement balance; negative differences favor traditional. When savings are spent, the comparison does not value the consumption they provided. The break-even retirement rate divides the net taxable savings balance by the employee retirement balance; the identical pre-tax employer match cancels. This is not an individualized recommendation.

Limits and scope

This regular-contribution model uses 2026 limits: employee deferrals up to $24,500, combined contributions up to $72,000 or compensation if lower, and match-eligible compensation capped at $360,000. Plan limits may be lower. Catch-up contributions, other plans and after-tax non-Roth contributions are not modeled. Constant contributions are projected as a scenario, not a forecast of future legal limits. Limits checked October 2, 2026; annual review due December 31, 2026.

Pre-tax match is a modeling choice, not a statement that all plans require it. Some plans permit designated Roth employer matching with current taxable income; that option is outside this model. Vesting losses, fees, inflation, early withdrawals, RMDs, changing salaries and tax-bracket or credit interactions are excluded. Qualified Roth withdrawal requirements still apply.

Sources: IRS: 2026 plan limits, IRS: Roth and pre-tax accounts, and IRS: Designated Roth employer contributions.

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