Roth is taxed now, traditional is taxed later. See which leaves more after tax.
A Roth vs. traditional 401(k) calculator compares the after-tax retirement value of contributing pre-tax versus after-tax, so you can see which leaves you with more spendable money.
A traditional 401(k) deducts contributions from today's taxable income and taxes withdrawals in retirement; a Roth does the opposite, no deduction now, but tax-free withdrawals later. Mathematically, the winner hinges almost entirely on whether your tax rate in retirement is higher or lower than it is today.
Comparing the two only works if the traditional side also invests the money it saves on taxes upfront, otherwise Roth looks better than it is. Once that's included, Roth wins when your retirement tax rate is at or above today's, and traditional wins when you expect a lower rate later. Many people split contributions to hedge the uncertainty.
Roth wins if your retirement tax rate is at or above today's; traditional wins if you expect a lower rate later. Many people split to hedge.
Because a traditional contribution lowers this year's taxes, a fair comparison invests that saving too. Otherwise the Roth appears artificially better.
Qualified withdrawals, after age 59½ and a five-year holding period, are free of federal income tax on both contributions and growth.
See the exact formula and a worked example on our methodology page.