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Traditional vs Roth 401(k)

Traditional saves tax now and taxes withdrawals; Roth taxes you now and nothing later. Compared at the same cost to your take-home pay.

After-tax value at retirement

It’s a tie

After tax, in 25 years: $528K from Traditional, $528K from Roth. It comes down to one question: is your tax rate higher now (22%) or in retirement (22%)?

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Roth equivalent: $7,800, the same take-home cost.
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Your marginal federal plus state rate.
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Same take-home cost

$10,000 into Traditional costs $7,800 of take-home pay after the tax saving. Putting that same $7,800 into Roth costs the same.

After tax, in 25 years
Traditional$528K
Roth$528K

Equal tax rates make them equal.

How this is calculated

Both accounts grow at the same rate. Traditional is taxed once, on the way out; Roth once, on the way in. Multiplication doesn’t care about order, so only the two tax rates matter.

Traditional = C × growth × (1 − 22%)
Roth = C × (1 − 22%) × growth

Limits for 2026: $24,500 for 401(k) and $7,500 for IRAs, with catch-up amounts at 50+. Employer matches go into the Traditional side either way. Not tax advice.