How the Roth vs Traditional 401(k) Calculator Works

This calculator shows you exactly how much money you take home per paycheck with Traditional vs. Roth 401(k). You enter your gross pay, contribution percentage, and tax rate. The tool calculates take-home pay for both options side by side.

The math is different for each:

If you make $3,000 per paycheck and contribute 6% ($180), Traditional reduces your taxable income to $2,820. At 22% tax, you pay $620 in taxes. Take-home: $2,200.

With Roth, you pay taxes on the full $3,000 ($660), then contribute $180. Take-home: $2,160. Traditional gives you $40 more per paycheck because of immediate tax savings.

Understanding Traditional vs. Roth 401(k)

Both are retirement accounts through your employer. Both have the same contribution limits ($23,000 for 2025, $30,500 if 50+). Both can include employer matching. The difference is when you pay taxes.

Traditional 401(k): Pay Taxes Later

Contributions go in before taxes. This reduces your taxable income now, which means lower taxes and higher take-home pay today. The money grows tax-free. When you withdraw in retirement, you pay income tax on everything (contributions plus growth).

Example: $100 contributed saves you $22 in taxes (at 22% rate). Your net cost is only $78, but $100 goes into the account. In retirement, if you withdraw $150 (original $100 plus $50 growth), you pay tax on the full $150.

Roth 401(k): Pay Taxes Now

Contributions are after-tax. You pay full taxes on your gross income, then contribute from what’s left. Your take-home is lower now. The money grows tax-free. When you withdraw in retirement, you pay zero taxes on contributions or growth.

Example: $100 contributed costs you the full $100 from your after-tax paycheck. No tax savings now. In retirement, if you withdraw $150, you pay zero tax on it. The entire amount is yours.

Why Paycheck Amounts Differ

Traditional gives you immediate tax relief. Every dollar you contribute reduces your taxable income by a dollar. At a 22% tax rate, $1,000 in contributions saves $220 in taxes. Your paycheck only drops by $780, but $1,000 goes into retirement.

Roth has no immediate tax benefit. $1,000 in contributions costs you the full $1,000 from your paycheck. You already paid taxes on that income before contributing.

This is why Traditional always gives you a bigger paycheck than Roth when contributing the same percentage. The tax savings boost your take-home now.

Common Mistakes When Choosing Between Roth and Traditional

Assuming Traditional Is Always Better Because of Bigger Paychecks

Traditional does give you more money per paycheck. But that doesn’t make it automatically superior. In retirement, you’ll pay taxes on withdrawals. If tax rates increase or your retirement income is high, you might pay more in taxes later than you saved now.

Roth costs you more per paycheck today, but every dollar you withdraw in retirement is tax-free. If you’re in your 20s or 30s and expect higher income (and higher taxes) later, Roth might save you money overall.

Not Considering Your Current vs. Future Tax Bracket

If you’re in a high tax bracket now (32%, 35%, 37%) and expect lower income in retirement (12%, 22%), Traditional makes sense. You avoid high taxes now and pay lower taxes later.

If you’re in a low tax bracket now (10%, 12%) and expect higher income in retirement or think tax rates will increase, Roth makes sense. Pay low taxes now, avoid potentially higher taxes later.

Forgetting About Required Minimum Distributions

Traditional 401(k) requires you to start taking withdrawals at age 73 (as of 2024). These Required Minimum Distributions (RMDs) are taxable income whether you need the money or not. This can push you into higher tax brackets in retirement.

Roth 401(k) also has RMDs, but you can roll it into a Roth IRA, which has no RMDs during your lifetime. This gives you more control over retirement income and taxes.

Not Diversifying Tax Treatment

You don’t have to choose only Traditional or only Roth. Many people do both: some Traditional for immediate tax relief, some Roth for tax-free retirement income. This gives flexibility in retirement to manage tax brackets by pulling from different accounts.

Example: Contribute 4% Traditional (maximize employer match and get tax savings) plus 4% Roth (build tax-free bucket). You get some tax benefit now and some tax-free money later.

Ignoring State Taxes

If you live in a high-tax state now (California, New York, New Jersey) but plan to retire in a no-tax state (Florida, Texas, Nevada), Traditional saves you state taxes now that you won’t pay later anyway.

If you’re in a no-tax state now but might retire somewhere with income tax, Roth might be smarter.

Edge Cases and Real Scenarios

What If I’m Early in My Career?

Younger workers often earn less and are in lower tax brackets. Paying taxes now (Roth) at 12% or 22% is cheaper than potentially paying at 24% or 32% in retirement when you’ve had decades of career growth.

If you’re 25 making $50,000, you’re probably in the 12% or 22% bracket. Locking in that tax rate via Roth could be smart if you expect $100,000+ income later in your career.

What If I’m Close to Retirement?

Traditional becomes more attractive as you near retirement, especially if you’re in peak earning years. Get the maximum tax deduction now at high rates (32%+), then withdraw in retirement at lower rates (12%, 22%) when you’re living on Social Security and smaller income.

If you’re 55 making $150,000, Traditional saves you 32-35% in taxes now. In retirement living on $60,000, you might pay only 12-22% on withdrawals.

What If Tax Rates Increase?

If federal tax rates increase across the board in the future, Roth becomes retroactively better. You locked in today’s rates. Traditional users will pay the higher future rates on withdrawals.

Nobody knows if rates will increase, but historical context helps: today’s rates are relatively low compared to the 1950s-1980s when top rates exceeded 70%. Some people bet on Roth assuming rates will eventually rise.

What If I Need the Money Before Retirement?

Both Traditional and Roth 401(k) have penalties for early withdrawal (10% penalty plus taxes for Traditional, 10% penalty on earnings for Roth). Neither is good for short-term access to money.

Roth has a slight advantage: you can withdraw your contributions (not earnings) penalty-free anytime, though there are restrictions. Traditional penalizes all withdrawals before 59.5.

What If My Employer Only Offers One Type?

Many employers only offer Traditional 401(k). If you want Roth, you’d need to max out the 401(k) first, then contribute to a Roth IRA separately (if income limits allow).

Some employers offer both Traditional and Roth 401(k). You choose how to split contributions. Employer match always goes into Traditional regardless of where you put your contributions.

What If I Do Both Traditional and Roth?

You can split contributions any way you want, as long as total contributions stay under the limit. 3% Traditional + 3% Roth, 5% Traditional + 2% Roth, whatever works.

Your combined limit is $23,000 (or $30,500 if 50+), not separate limits for each type. So you can’t do $23,000 Traditional plus $23,000 Roth. It’s $23,000 total across both.

How to Decide Between Roth and Traditional

Use This Simple Framework

Choose Traditional if: You’re in a high tax bracket now (24%+), expect lower income in retirement, need maximum take-home pay today, or want immediate tax deductions.

Choose Roth if: You’re in a low tax bracket now (12%, 22%), expect higher income in retirement, can afford lower paychecks today, or want tax-free retirement income.

Split between both if: You’re uncertain about future tax rates, want flexibility in retirement, or like hedging your bets on tax policy.

Run the Numbers

Use this calculator to see the paycheck impact. If the difference is $50-$100 per paycheck and you can afford it, Roth gives you future flexibility. If you’re struggling to cover bills and every dollar matters, Traditional gives you more breathing room now.

Remember: the contribution is the same either way. $500 per paycheck to Traditional costs you ~$390 (after tax savings). $500 to Roth costs you $500. That $110 difference is what you’re deciding on.

Consider Your Retirement Plans

If you plan to spend heavily in retirement (travel, hobbies, helping kids), you’ll have high income then. Roth means that income is tax-free. If you plan to live modestly, Traditional works because you’ll pay low taxes on small withdrawals.

Account for Other Retirement Income

If you’ll have a pension, rental income, or part-time work in retirement, you might not be in a low tax bracket. Adding Traditional 401(k) withdrawals to that income could push you higher. Roth withdrawals don’t count as taxable income.

Sample Paycheck Comparisons

Gross Pay	Contribution	Tax Rate	Traditional Take-Home	Roth Take-Home	Difference
$2,000	6%	12%	$1,646	$1,640	$6
$3,000	6%	22%	$2,200	$2,160	$40
$4,000	8%	24%	$2,720	$2,720	$77
$2,500	10%	22%	$1,695	$1,650	$55
$5,000	6%	32%	$3,504	$3,400	$96

Frequently Asked Questions

Can I Switch From Traditional to Roth Later?

You can’t convert existing Traditional 401(k) to Roth 401(k) while still at the same employer. You can change future contributions anytime. If you leave the job, you can roll Traditional 401(k) to a Roth IRA (taxable conversion) or keep it as Traditional.

Does Employer Match Go Into Traditional or Roth?

Employer match always goes into Traditional 401(k), even if your contributions are Roth. Employer money is always pre-tax regardless of your choice.

Which Gives Me More Money in Retirement?

If tax rates stay the same, they’re mathematically equivalent in total value. If your tax rate is lower in retirement, Traditional wins. If your tax rate is higher in retirement, Roth wins. Nobody knows future tax rates for certain.

Can I Do Both Traditional and Roth?

Yes, if your employer offers both. You can split contributions however you want. Many people do 50/50, or maximize employer match via Traditional then add Roth on top. Total contributions across both cannot exceed $23,000 (2025 limit).

What If I’m in a High Tax Bracket?

Traditional is usually better. The immediate tax savings are substantial. If you’re paying 32% or 35% in taxes now, deferring that via Traditional makes sense unless you expect even higher rates in retirement (unlikely).

What If I’m in a Low Tax Bracket?

Roth is often better. If you’re paying 10% or 12% now, locking in that low rate makes sense. Your income will likely increase over your career, putting you in higher brackets later. Paying taxes now at low rates is smart.

Do I Pay FICA Taxes on 401(k) Contributions?

Yes. Both Traditional and Roth 401(k) contributions come after FICA (Social Security and Medicare taxes). Only federal and state income taxes are affected by Traditional vs. Roth. FICA is the same for both.

Can I Change My Mind Each Year?

Yes. You can change your contribution type anytime (most employers allow changes each pay period or quarterly). Previous Traditional contributions stay Traditional, previous Roth stays Roth, but you can change future contributions freely.

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