⚖️ Roth vs Traditional 401(k): Calculator (2026)

Compare the after-tax retirement value of Roth vs Traditional 401(k) contributions — including the often-overlooked value of investing your Traditional tax savings.

$
%
%
Yrs
%
ESTIMATED ADVANTAGE AT RETIREMENT
$0
in favor of Traditional + side account
Traditional 401(k), After Tax
$0
Roth 401(k), Tax-Free
$0
Side Account From Tax Savings
$0
Total Traditional Strategy
$0

How This Comparison Works

Most Roth vs Traditional comparisons only look at the 401(k) balance itself — which makes Roth look like the obvious winner whenever your tax rate doesn't drop in retirement. But that comparison is incomplete: a Traditional contribution lowers your tax bill today, and what you do with that tax savings matters. This calculator models both the 401(k) balance and what happens if you invest the Traditional tax savings in a separate taxable account.

The Two Strategies Being Compared

Roth Strategy: Contribute $X to Roth 401(k) → grows tax-free
Traditional Strategy: Contribute $X to Traditional 401(k) (taxed later) + invest the tax savings ($X × current rate) in a taxable side account (taxed at long-term capital gains rates on growth only)

Both strategies assume the same $X contribution amount, since that's what the IRS elective deferral limit actually constrains — not your take-home pay. The Traditional strategy's side account is taxed just once at the end, at a flat 15% long-term capital gains rate applied only to its investment gains (not its contributions, since those were already after-tax dollars).

Why Roth Still Wins at Equal Tax Rates, Even With a Smart Side Account

If your current and retirement tax rates are identical, a basic 401(k)-only comparison would call it a tie. Reinvesting your Traditional tax savings in a side account closes nearly all of that gap — in a world with zero tax on investment growth, it would be an exact tie. But the side account's growth doesn't escape tax entirely: even a preferential 15% long-term capital gains rate is still something, while Roth 401(k) growth is taxed at 0%. So the "optimized" Traditional-plus-side-account strategy typically still lands a bit behind Roth when tax rates don't change — you generally need your retirement tax rate to fall meaningfully below today's rate before Traditional pulls ahead.

⚠️ Important: This calculator uses simplified assumptions: a flat 15% long-term capital gains rate on the side account's growth, no state taxes, no early-withdrawal penalties, and the same expected return for both the 401(k) and the side account. Required Minimum Distributions, Social Security taxation, and changing tax brackets in retirement aren't modeled. Use this as a directional comparison, not a precise projection — and remember the side-account advantage only applies if you genuinely invest the tax savings.

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❓ Frequently Asked Questions

Should I choose Roth or Traditional 401(k)?
As a general rule, Traditional 401(k) contributions tend to come out ahead if you expect to be in a lower (or equal) tax bracket in retirement than you are today, while Roth contributions tend to come out ahead if you expect to be in a meaningfully higher tax bracket in retirement. The right choice also depends on whether you'd actually invest the tax savings from a Traditional contribution rather than spend it.
What's the real difference between Roth and Traditional 401(k) contributions?
Traditional 401(k) contributions reduce your taxable income today and grow tax-deferred, but withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions don't reduce your taxable income today, but qualified withdrawals in retirement — including all investment growth — are completely tax-free.
Does investing the tax savings from a Traditional 401(k) matter?
Yes, it closes most of the gap, but usually not all of it. A Traditional 401(k) contribution lowers your tax bill today, and reinvesting that savings in a taxable account brings the two strategies much closer together — in theory, they'd be exactly equal at the same tax rate if the side account's growth were never taxed. In practice, that side account's gains are still taxed eventually (even at a preferential long-term capital gains rate), so the combined Traditional-plus-side-account strategy usually ends up a little behind an equivalent Roth 401(k) contribution unless your retirement tax rate drops somewhat below today's.
Can I contribute to both Roth and Traditional 401(k)?
Yes, many 401(k) plans let you split contributions between Roth and Traditional. However, the IRS elective deferral limit ($24,500 in 2026, plus any catch-up) applies to your combined Roth and Traditional employee contributions, not to each separately.
What if I'm not sure what tax bracket I'll be in at retirement?
Many financial planners recommend splitting contributions between Roth and Traditional to hedge against tax-rate uncertainty — this is called "tax diversification." It gives you flexibility to draw from whichever account is more tax-efficient once you know your actual retirement tax situation.

🏆 About This Tool — Accuracy & Trust

🔒 Data Privacy: All calculations run entirely within your browser using JavaScript. Nothing you enter here is ever transmitted to our servers, stored, sold, or shared.

📐 Accuracy Note: Projections use 2026 contribution-limit context and standard compound-growth math. This is an educational estimate, not personalized tax or investment advice — consult a financial advisor or CPA for your specific situation.

📅 Last Updated: October 2026.

Created and maintained by , founder of Your Calculator Hub · Last updated . How we build and check our calculators. Results are estimates for general information, not professional advice.