In this chapter we introduced the traditional 401(k) and Roth IRA. This calculator shows how an employee match can be a large difference over the course of your career. We look at what happens when you invest in a traditional 401(k), and if you put the equivalent amount into a Roth IRA, how your post-retirement accounts would look. Key variables, like the tax rate, are what advisors point to as a key benefit for the Roth IRA. You can enter various tax rates to see what impact that can have on your planning.
Pretax starting balance. $10,000 invested here is $10,000 in the 401(k). Not added to the Roth line.
Default 50% of each dollar you defer. Same rule as Chapter 2.
Default 6% of salary. This caps employer dollars, not the percent you have to defer. At 50% match and a 6% cap, you put in 12% of pay to collect the full match.
Starts at the recommended monthly amount so you capture the full match. Changing the match updates the recommendation; it does not zero this field. Each later year scales with your annual raise. Extra above the match cap does not get more company money.
First-year annual employee 401(k) deferral: —
Money already in the Roth IRA. It is a sunk cost, so today’s tax is not taken out of this balance. Not added to the 401(k) line.
Defaults to the after-tax equivalent of your first-year 401(k) monthly deferral at your current tax rate. Each later year scales with your annual raise.
First-year annual Roth IRA contribution: —
Defaults to the IRS 2025 single-filer marginal rate for your salary from IRS federal income tax rates and brackets (taxable income after the $15,750 standard deduction). You can edit it.
Applied to your illustrated annual withdrawal (below), not to your full balance.
Illustrates a 4% withdrawal from the 401(k) each year after retirement. By default the Roth IRA withdraws the same percentage of its own leftover. Choose equal withdrawals to take the same dollar amount from both.
Tax rates use the 2025 IRS single-filer ordinary brackets on taxable income: annual salary minus the $15,750 standard deduction (and minus employee 401(k) deferral for that year’s lookup). Brackets stay frozen as salary grows with raises. From retirement through +20 post-retirement years, the retirement tax rate is frozen (editable above). Married filing jointly and other statuses → Retirement Simulator.
The tax-now versus tax-later comparison follows William Reichenstein, “Saving in Roth Accounts and Making Roth Conversions before Retirement in Today’s Low Tax Rates,” Journal of Financial Planning (July 2020). With no employer match, $1 pretax in a 401(k) and the after-tax twin in a Roth IRA grow to the same after-tax leftover when the two rates match; Roth leftover is larger if the later rate is higher. This page compares where new savings go. It is not a Roth conversion of money already in a 401(k). Reichenstein also notes that a retiree’s true marginal rate can exceed the bracket because of Social Security taxation and Medicare IRMAA, which this calculator does not model.
Roth return defaults to the 401(k) return. Raise it to illustrate a more aggressive Roth allocation (for example 9% vs 7%). In historical mode these rates apply only after the Yahoo history runs out.
Remaining in accounts
Roth plus compounded taxes vs 401(k)
Stacked bars are Roth End of year plus Roth compounded taxes. The solid 401(k) line should sit on the stack until withdrawals when tax rates match and there is no match. Uncheck initial investment to drop starting balances from this chart. The second line is the 401(k) path with the same employee deferral and no company match.
Each comparison starts with that account’s current balance only. Those starting dollars are already in the account ($10,000 default stays $10,000 in both the 401(k) and the Roth IRA). New Roth contributions are after tax; the starting Roth balance is not. The first chart is remaining in accounts: 401(k) end of year on the 100% 401(k) path, Roth End of year on the 100% Roth path, matching those table columns. After-tax value of leftover 401(k) at retirement (still pretax until withdrawn) is in the summary cards. No new contributions after retirement.
Average 401(k) and Roth withdrawals after retirement.
Roth leftover beats 401(k) leftover × (1 − tax) above this rate. The tax inputs stop at 100%. This figure is not capped, so it can print above 100% or below 0%.
Same comparison using only your 401(k) dollars (no employer match).
The first year row includes that year’s monthly contributions (12 months at the first-year amount). It is not a $0 opening snapshot; deposits do not wait until the next age. The monthly table still starts with an opening snapshot (contributions $0), then deposits begin the next month.
| Age | Salary | Tax rate | 401(k) annual return | 401(k) monthly return | Roth IRA annual return | Roth IRA monthly return | Initial investment | 401(k) recommended contribution | 401(k) employee contribution | 401(k) company match | 401(k) before tax | 401(k) withdrawal | 401(k) income tax | 401(k) withdrawal penalty | 401(k) interest | 401(k) end of year | Actual Roth IRA contribution | Roth IRA before tax | Roth IRA withdrawal | Roth IRA taxes | Roth compounded taxes | Roth IRA withdrawal penalty | Roth IRA interest | Roth End of year | Remaining in accounts | Spendable |
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401(k) columns: the 100% traditional 401(k) path. Roth IRA columns: the 100% Roth IRA path. Roth IRA withdrawal: by default, the same percentage of leftover Roth as the 401(k) withdrawal rate. Equal-dollar mode matches that row’s 401(k) withdrawal, excluding 401(k) income tax (shown as a negative leaving the Roth). 401(k) income tax: tax on the 401(k) withdrawal, shown negative. Paid from the withdrawal (reduces spendable), not subtracted from 401(k) end of year. 401(k) interest: market growth that period. 401(k) end of year: prior end plus contributions plus interest, minus withdrawal. Penalty is shown in its column and reduces spendable; it is not taken from leftover 401(k). Roth IRA taxes: income tax paid when contributing after-tax dollars that year (not taken from the Roth balance). Roth compounded taxes: Roth IRA taxes compounded at the 401(k) return. Not taken from the Roth. Roth IRA interest: market growth that period. Roth End of year: prior end plus contributions plus interest, minus withdrawal. Spendable: cash kept from the 401(k) path’s withdrawal after tax and penalty. $0 until retirement. Required minimum distributions on 401(k) generally begin at age 73. In historical mode, 401(k) / Roth monthly return columns are that month’s actual index return.
401(k) end of year should equal Roth End of year plus Roth compounded taxes. Same tax rate, no match, and twin contributions keep this within a dollar. Match, different tax rates, or different returns show a gap.
| Age | 401(k) end of year | Roth End of year | Roth compounded taxes | Roth + compounded taxes | Difference | Tie |
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Same columns as the year table. Dollar amounts are monthly (salary, contributions, taxes); 401(k) recommended contribution stays annual. The first monthly row is the opening snapshot (contributions $0); deposits start the next month. Balances are end-of-month totals.
| Age | Salary | Tax rate | 401(k) annual return | 401(k) monthly return | Roth IRA annual return | Roth IRA monthly return | Initial investment | 401(k) recommended contribution | 401(k) employee contribution | 401(k) company match | 401(k) before tax | 401(k) withdrawal | 401(k) income tax | 401(k) withdrawal penalty | 401(k) interest | 401(k) end of month | Actual Roth IRA contribution | Roth IRA before tax | Roth IRA withdrawal | Roth IRA taxes | Roth compounded taxes | Roth IRA withdrawal penalty | Roth IRA interest | Roth End of month | Remaining in accounts | Spendable |
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