Compare the after-tax retirement value of investing in a Roth IRA versus a traditional 401(k). See which account wins based on your tax bracket, contribution amount, employer match, and time horizon. Side-by-side comparison with clear winner badges.
PMT = Annual contribution + employer match dollars
r = Expected annual return (as decimal)
n = Years until retirement
After-tax value = FV × (1 − retirement_tax_rate / 100)
PMT = Annual contribution (post-tax dollars)
r = Expected annual return (as decimal)
n = Years until retirement
After-tax value = FV (no tax on qualified withdrawals)
This calculator uses Method 1 (Same Pre-Tax Amount): both accounts receive the same $X annual contribution. The Roth IRA contribution costs more out-of-pocket because contributions are after-tax. The 401(k) contribution is pre-tax, reducing your current taxable income.
Employer match is calculated as: salary × match_pct / 100, but only if your contribution covers the match threshold. The match is added to the 401(k) annual total.
Breakeven retirement tax rate = 1 − (FV_Roth / FV_401k_pre_tax)
If current_tax_rate > retirement_tax_rate → 401(k) wins
If current_tax_rate < retirement_tax_rate → Roth IRA wins
If equal rates → Tie (same after-tax value)
A detailed side-by-side comparison of Traditional 401(k) vs Roth IRA features and rules.
| Feature | Traditional 401(k) | Roth IRA |
|---|---|---|
| Taxes on Contributions | Pre-tax (reduces taxable income now) | After-tax (no deduction now) |
| Taxes on Withdrawals | Ordinary income tax rates | None (qualified withdrawals) |
| 2025 Contribution Limit | $23,500 ($31,000 with catch-up, 50+) | $7,000 ($8,000 with catch-up, 50+) |
| Income Limit | None (all employees eligible) | Phase-out: $150k-$165k single / $236k-$246k joint |
| Employer Match | ✓ Yes (common: 50% up to 6%, or 100% up to 3-4%) | ✗ No |
| RMDs at Age 73+ | ✓ Yes (Required Minimum Distributions) | ✗ No (during owner's lifetime) |
| Early Withdrawal Penalty | 10% + income tax on entire amount | Contributions tax-free; earnings 10% + tax (unless exception) |
| Loans Available | ✓ Yes (up to 50% of balance, max $50k) | ✗ No (but contributions can be withdrawn anytime) |
| Typical Fees | Plan fees (0.5-2% AUM common) | Brokerage fees only (often 0%) |
| Investment Options | Limited to plan menu (mutual funds, target-date funds) | Unlimited (stocks, bonds, ETFs, mutual funds, etc.) |
Young professionals and employees often struggle to choose between a Roth IRA and a traditional 401(k). The right answer depends on your current tax bracket, your expected retirement tax bracket, and whether your employer offers a match. This calculator helps cut through the noise with hard numbers.
Both accounts start with the same annual investment to provide a fair, apples-to-apples comparison of after-tax retirement values.
401(k) withdrawals are taxed at ordinary income rates. Roth IRA withdrawals are tax-free. The calculator shows both outcomes clearly.
Employer matching can dramatically tip the scales toward the 401(k). Free money from your employer often makes the 401(k) the better first choice.
Find the exact retirement tax rate where both accounts produce the same after-tax value — your personal tiebreaker point.
Real data references: 2025 401(k) contribution limit is $23,500 employee + $7,500 catch-up (age 50+). 2025 Roth IRA limit is $7,000 + $1,000 catch-up. 2026 limits are expected to rise slightly (~$24,000 for 401(k)). Roth IRA income phase-out for 2025: $150k-$165k single, $236k-$246k married filing jointly. Typical employer 401(k) match: 50% up to 6% of salary (most common) or 100% up to 3-4%. Ordinary income tax brackets for 2025: 10%, 12%, 22%, 24%, 32%, 35%, 37%. Most retirees fall in the 12-22% brackets.
Two dedicated result cards showing after-tax retirement values, with clear winner/loser badges for instant understanding.
Get an instant verdict on which retirement account builds more after-tax wealth, plus the projected dollar difference.
Account for employer 401(k) matching with an option to exclude it, so you can see the pure tax-advantage comparison.
The calculator computes the exact retirement tax rate where both accounts break even — your personal decision point.
Short answer: get the full employer 401(k) match first, then max out your Roth IRA, then return to the 401(k). The employer match is an instant 50-100% return on your money — no investment can beat that. After capturing the match, the Roth IRA offers tax-free growth, no RMDs, and unlimited investment choices. If you still have more to save after maxing your Roth IRA, go back to the 401(k) for the additional tax deferral. Use this calculator to plug in your specific numbers.
Yes, absolutely! Having both accounts is a powerful and common strategy. The 2025 401(k) contribution limit is $23,500 ($31,000 with catch-up if 50+), completely separate from the Roth IRA's $7,000 limit ($8,000 with catch-up). Contributing to both gives you tax diversification in retirement — some withdrawals will be fully taxable (401k) and some tax-free (Roth), letting you manage your taxable income strategically each year.
For 2025, the Roth IRA phase-out range is $150,000-$165,000 MAGI for single filers and $236,000-$246,000 for married couples filing jointly. If your income exceeds these limits, you cannot contribute directly to a Roth IRA. However, you can use the Backdoor Roth IRA strategy: contribute to a traditional IRA (no income limit), then convert those funds to a Roth IRA. This is a perfectly legal strategy used by many high-income earners. Consult a tax professional to ensure you execute it correctly.
The employer match is essentially free money that only applies to the 401(k). For example, if your salary is $60,000 and your employer matches 100% up to 5% of salary, that's an extra $3,000 per year added to your 401(k) — on top of your own contributions. This typically makes the 401(k) the clear winner when a match is available. The rule of thumb: always contribute enough to your 401(k) to get the full match before putting money into any other retirement account.
RMD stands for Required Minimum Distribution. Starting at age 73 (under SECURE 2.0 Act), owners of traditional 401(k)s and traditional IRAs must begin taking annual withdrawals based on IRS life expectancy tables. These withdrawals are taxed as ordinary income. Roth IRAs have no RMDs during the original owner's lifetime, meaning your money can continue growing tax-free indefinitely. This is a major advantage for retirees who don't need the income and want to leave a tax-free inheritance to their beneficiaries.
This comparison is designed for young professionals deciding which retirement account to prioritize, and employees weighing the trade-off between 401(k) tax deferral and Roth IRA's tax-free growth. Typical scenarios include:
Assumption note: This calculator uses the same pre-tax contribution amount for both accounts for a fair comparison. The Roth IRA contribution has a higher after-tax cost because it is made with post-tax dollars. If you want to compare equal after-tax out-of-pocket costs, you would need to gross up the Roth contribution, which isn't modeled here.