Roth vs 401(k) Calculator
Compare a Roth (after-tax) contribution against a traditional pre-tax 401(k) over time, using your tax rate today and the rate you expect in retirement.
The Roth-vs-traditional question comes down to one thing: whether your tax rate will be higher now or in retirement. A Roth pays tax on the money today and grows tax-free; a traditional 401(k) skips tax now but taxes every withdrawal later. This calculator makes an apples-to-apples comparison by starting from the same pre-tax amount devoted to retirement each year.
How the comparison works
With a traditional 401(k) you invest the full pre-tax amount, it grows, and you pay tax on withdrawals. With a Roth you pay income tax on that amount first, then invest what's left, and withdrawals are tax-free.
Roth = Amount × (1 − tax now) × (1 + return)^years
| Situation | Usually better |
|---|---|
| Lower tax rate in retirement | Traditional (pre-tax) |
| Higher tax rate in retirement | Roth |
| Same tax rate | A tie — mathematically equal |
Worked example
$6,000 a year for 30 years at 7%, with a 24% tax rate now and 22% in retirement:
| Growth factor = 1.07³⁰ | ≈ 7.61× |
| Traditional = 6,000 × 7.61 × (1 − 0.22) | $35,625 |
| Roth = 6,000 × (1 − 0.24) × 7.61 | $34,712 |
Here traditional wins by about $913 per year of contributions, purely because the retirement tax rate is lower than today's.
Why a Roth can still be the better choice
The math above assumes you invest the tax savings from a traditional contribution. Many people don't, which quietly favours the Roth. Roths also have no required minimum distributions, give tax-free income that won't push up Medicare premiums or Social Security taxation, and are a hedge against tax rates rising in the future. Younger savers in a low bracket today often lean Roth for those reasons.