Traditional or Roth 401(k)?

Assumptions

• Everything is at today's prices: the return is what the account earns beyond rising prices, and the 2026 brackets are kept (they are adjusted every year by chained CPI, which rises a little slower than prices, so retirement tax here is slightly understated). Congress can change them.
• Every split is compared at the same take-home cost as your plan: the Traditional dollars minus the tax they save this year, plus the Roth dollars, plus anything put in a taxable account. A Roth dollar costs a dollar of take-home pay; a Traditional dollar costs less, so the same pay buys more of it.
• Contributions go in at the end of each year; in retirement a level amount comes out each year until the account is empty.
• Pay grows by the rate you enter (0: the same every year, at today's prices); the 401(k) money, the match and a spouse's own 401(k) keep the same percent of it, each year's tax uses that year's pay, and the 65+ deduction starts the year you turn 65. The 2026 limits stay as they are at today's prices (they rise with inflation), for your age today. Social Security counts the best 35 years of that pay. Each year the other splits take what your plan takes out of take-home pay that year.
• Federal income tax (with the 3.8% net investment income tax on a taxable account), and state income tax if you enter it. No FICA (the same for both choices).
• This year's tax uses all of your pay (RSUs and bonus too) plus other income you enter, less the standard deduction (larger for anyone 65 or older now) and any extra deductions you enter; the 401(k) percent, the match and the limit go by the pay your plan counts. RSUs are taken to come every year like the pay.
• State income tax is a flat rate you enter: now, on the pay a Traditional contribution keeps out of tax and on the taxable account's dividends; in retirement, on the Traditional withdrawals and on the taxable account's dividends and gains. Roth withdrawals and Social Security are taken as untaxed by the state (most states don't tax Social Security; a few tax part of it). It isn't deducted from federal tax (only those who itemize can, up to the SALT cap), and the retirement tax-rate multiple doesn't change it. Being one flat rate, it can overstate what a low earner saves now, where the state's own deduction covers much of the pay.
• “Other savings now” is a flat share of each Traditional dollar that you enter, for things that go by AGI. The Saver's Credit, the child tax credit and the earned income tax credit are pointed out when your income is in their range, but not figured: they depend on what the calculator doesn't ask (children, other credits, how much tax a credit can offset).
• Other pre-tax money (the employer match, savings you already have, a spouse's Traditional and match) and other income such as a pension are taxed in retirement first; the Traditional withdrawals here come out on top of them. Savings and future matches grow at the same return and come out level over the same years; a spouse is taken to keep contributing until you retire.
• Social Security is taxed per IRS Publication 915. Its $25,000 / $34,000 thresholds ($32,000 / $44,000 joint) are fixed in law and do not rise with prices, so at today's prices they shrink every year.
• From 65, retirement uses the larger standard deduction for 65 and older (an extra $2,050 single, $1,650 per spouse, each by their own age). The temporary $6,000 senior deduction (2025–2028) is left out.
• Social Security is estimated with the 2026 formula of the Social Security Administration (SSA), as if your pay in every year of US work so far were today's total pay (RSUs too) at today's prices, and the years left too, or growing by the pay rise you enter; with fewer than 35 years the missing ones count as zero. It is the full benefit at 67, adjusted for the age you start (62 to 70), and counted from that age on: retirement years before it have no Social Security, so Traditional withdrawals there are taxed less. Starting while still working can have benefits held back by the earnings test until 67; that is not modelled.
• Couples: each of you gets the larger of your own benefit and half of the other's full benefit (the spousal benefit), each starting at the age entered by their own age. In reality the spousal benefit starts only once the other has started; it is smaller before 67 and does not grow after it. A spouse who no longer works is counted with no benefit of their own. After one of you dies, the survivor keeps only the larger benefit and files as single: enter those years in “Years one of you is alone at the end” (the survivor's own ages, a pension that shrinks and the two years a surviving spouse with a child may still file jointly are left out). If you are divorced after 10 or more years of marriage, or widowed, you may be able to claim on that spouse's record: check ssa.gov.
• Head of household: this year's tax uses its brackets and deduction ($24,150); retirement is figured as single, because head of household needs a qualifying person at home, usually a child, and most file single once the children are grown.
• The retirement tax-rate multiple scales every federal tax paid in retirement, a simple way to ask what happens if rates rise.
• Medicare IRMAA: from 65, everyone on Medicare whose income (modified AGI) is above $109,000 ($218,000 joint) pays more for Part B and Part D, in steps up to $578 a month a person (2026). The calculator adds what the Traditional withdrawals, and a taxable account's dividends and gains, cost in surcharges; Roth withdrawals don't count. It uses each year's own income (Medicare looks two years back), keeps the lines at today's prices (they are indexed) and the amounts at 2026's (Medicare costs tend to rise faster), and the tax-rate multiple doesn't change it.
• The other splits put 0%, 25%, 50%, 75% or 100% of that take-home cost into Roth, dollar for dollar; the rest buys as many pre-tax Traditional dollars as it can. When a split would need more than the 2026 limit (or your salary) in total, the 401(k) takes what fits and the rest of the same take-home pay goes into a taxable account.
• The taxable (brokerage) account is taken to hold a broad stock index fund: dividends of about 1.5% a year, all qualified, taxed every year and the rest put back in; in retirement it pays out level like the 401(k), and the gain part of what is sold is taxed. Qualified dividends and long-term gains pay 0%, 15% or 20% depending on taxable income (2026: 0% up to $49,450, $98,900 joint; 20% above $545,500, $613,700 joint), come on top of the other income, and count toward taxable Social Security. Above $200,000 of income ($250,000 joint) they also pay the 3.8% net investment income tax; that threshold is fixed in law, so at today's prices it shrinks every year. Losses, state tax and the step-up at death are left out.
• If Traditional and Roth together are above the 2026 limit, both are scaled down to it: $24,500, $32,500 from age 50, $35,750 at ages 60–63. From 2026, if last year's wages at your employer were above $150,000, the catch-up part (above $24,500) has to be Roth. The calculator judges this by your own salary: Traditional is then held to $24,500, anything above it counts as Roth, and the other splits have to fit the same rule.

Not in the results, but worth knowing

• Retiring before 65 with Marketplace (ACA) health insurance: the premium tax credit goes by income, so Traditional withdrawals can cost you subsidy as well as tax; Roth withdrawals don't count.
• Low-income years, such as between retiring and starting Social Security, can be used to convert some Traditional money to Roth at low tax rates: Traditional now, Roth later. The calculator doesn't model conversions.
• From 73 (75 if born in 1960 or later) the IRS requires a minimum withdrawal from Traditional money each year; a Roth 401(k) has none since 2024. The calculator's level withdrawals are usually above it; with large pre-tax savings the minimum can push income up late in life.
• Leaving the US, or retiring abroad: a 401(k) paid to someone no longer a US resident usually has 30% US tax withheld unless a tax treaty lowers it, before 59½ the extra 10% can still apply, and the new country may tax it too, Roth included (not every country treats Roth as tax-free). Ask an adviser who knows both countries.
• Self-employed with a solo 401(k): Traditional money also lowers your qualified business income, so the 20% QBI deduction shrinks and Traditional saves less than shown; the employer part can be Roth too.
• Government jobs: a 457(b) plan has its own limit ($24,500 in 2026) on top of a 401(k) or 403(b), so both can be filled. (A 457(b) at a nonprofit, offered to top earners only, is a different kind: the money stays the employer's until it is paid out.)
• Money left at the end goes to your heirs: an inherited Roth comes out tax-free; an inherited Traditional is taxed at the heirs' rates. Both usually have to be emptied within 10 years (a spouse can treat it as their own). The calculator spends the accounts down by the last age entered.
• Late-life costs and giving favour Traditional: large medical or nursing-home bills can be deducted (above 7.5% of AGI, if you itemize), so the Traditional money paying them is taxed little; from 70½, gifts to charity straight from an IRA (qualified charitable distributions) aren't taxed at all, after rolling the 401(k) into an IRA.

Sources

• IRS IR-2025-103 / Rev. Proc. 2025-32: 2026 brackets, standard deduction, additional standard deduction
• IRS Rev. Proc. 2025-32, sections 4.03, 4.05, 4.06: 2026 capital gains rate amounts, child tax credit, earned income credit
• IRS: questions and answers on the net investment income tax (3.8%; thresholds not indexed)
• IRS: child tax credit (full up to $200,000 of income, $400,000 joint)
• IRS Publication 596: earned income credit (earned income is W-2 box 1 wages, which leaves out Traditional 401(k) money)
• Pennsylvania Department of Revenue: employee 401(k) contributions are taxable, distributions after retirement age are not
• CMS: 2026 Medicare Parts A & B premiums and deductibles (the IRMAA tiers for Part B and Part D)
• IRS Publication 915: Social Security and equivalent railroad retirement benefits
• IRS IR-2025-111: 2026 401(k) and IRA limits, Roth IRA income limits
• IRS Topic 558: additional tax on early distributions (before 59½; exceptions incl. leaving the job after 55)
• IRS: FAQs on designated Roth accounts (qualified distributions: 5 taxable years and 59½)
• IRS Notice 2025-67: 2026 limits, incl. the $150,000 wage threshold for Roth catch-up contributions, the $72,000 limit on everything put in a 401(k) in a year and the Saver's Credit AGI limits
• SSA: Social Security benefit amounts (average indexed monthly earnings over up to 35 years, the benefit formula)
• SSA: benefit formula bend points (2026: $1,286 and $7,749 a month)
• SSA: contribution and benefit base (2026: $184,500)
• SSA: Social Security tax rates (6.2% of pay)
• SSA: benefits for spouses (up to half of the worker's full benefit)
• SSA: credits (40 to qualify for retirement benefits)
• SSA: benefit reduction for early retirement (5/9 and 25/36 of 1% a month)
• SSA: delayed retirement credits (8% a year after full retirement age, up to 70)
• SSA: starting benefits early (from 62; full benefits at full retirement age)

For learning only: not investment, tax or legal advice.

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