Traditional vs Roth — how to choose
Both grow tax-free. The difference is when you're taxed: a Traditional 401(k)/IRA gives you a deduction today and is taxed at withdrawal; a Roth uses after-tax money now and is never taxed again.
The one rule that decides it
From the same after-tax dollars, the Traditional account ends up worth the Roth amount times (1 − retirement tax rate) ÷ (1 − current tax rate):
- Traditional wins if your tax rate will be lower in retirement.
- Roth wins if your tax rate will be higher in retirement.
- Tie if they're equal.
Because the deduction is worth your marginal rate, your current income and state matter — this tool pulls the real 2026 federal + state marginal rates for both points in time.
Frequently asked questions
Which should I pick?
High earners now who expect lower retirement income often favor Traditional. Younger or lower-bracket savers, or those expecting high retirement income, often favor Roth — plus Roth gives tax-free, flexible withdrawals. The calculator shows the dollar difference for you.
Can I use both?
Yes — many people split contributions to hedge against future tax-rate uncertainty.