401k
401(k) Tax Comparison

Roth 401(k) vs
Traditional 401(k)

Both account types can help you save through an employer retirement plan. The biggest difference is when your contributions are taxed and how qualified withdrawals are treated.

Compare With Calculator → Roth 401(k) Guide
Tax Timing Snapshot COMPARE
Roth 401(k)

Tax Now

Qualified withdrawals generally tax-free

Traditional

Tax Later

Contributions generally pre-tax

Contribution
→
Retirement
At a Glance

Roth 401(k) and traditional 401(k) compared

The accounts can share many plan features, but their tax treatment differs at contribution and distribution.

Feature Roth 401(k) Traditional 401(k)
Contribution After-tax designated Roth contribution Generally pre-tax elective deferral
Current taxable income Contribution is included in gross income Contribution generally reduces current taxable income
Investment growth Can grow inside the retirement account Can grow inside the retirement account
Qualified withdrawal Generally tax-free Generally taxable
Income limit No income limit for designated Roth 401(k) contributions No income limit for traditional 401(k) contributions
Employee contribution limit Shares the applicable 401(k) elective-deferral limit Shares the applicable 401(k) elective-deferral limit
Employer match May be based on Roth deferrals; match goes to another account May be provided according to the plan's matching formula
Plan investment choices Determined by the employer plan Determined by the employer plan
Tax Treatment

The biggest difference is tax timing

Roth and traditional 401(k) contributions can be invested within the same type of employer plan, but their tax treatment happens at different points.

01

Roth contribution

The designated Roth contribution is included in gross income in the year it is made.

02

Traditional contribution

A traditional pre-tax elective deferral generally isn't included in current taxable income.

03

Retirement distribution

Qualified Roth distributions are generally excluded from gross income, while traditional distributions are generally taxable.

Contributions

Can you contribute to both?

Yes. If your plan offers both options, you can generally divide your elective deferrals between traditional pre-tax and designated Roth contributions.

Roth 401(k)

Example allocation: $12,250 to Roth and $12,250 to traditional contributions.

Roth

Traditional 401(k)

The same employee can direct another portion of their elective deferral toward traditional pre-tax contributions.

Pre-tax
2026 Rules

Contribution limits apply to both

Roth and traditional elective deferrals share the applicable employee 401(k) elective-deferral limit. Splitting contributions between the two does not create a separate Roth limit.

$24,500 2026 basic employee elective-deferral limit
$8,000 General catch-up contribution for eligible participants age 50+
$11,250 Higher catch-up limit for eligible participants ages 60–63
$72,000 2026 defined-contribution annual additions limit before applicable catch-up contributions
Illustrative Scenarios

How the tax timing can look

These simplified examples demonstrate the timing of taxation. They are not forecasts of investment returns or future tax rates.

Roth 401(k)

Taxes generally come first

A Roth contribution is included in gross income in the year it is contributed.

  • ✓ Contribution is after tax.
  • ✓ Current taxable income generally does not receive the pre-tax deduction.
  • ✓ Qualified distributions are generally tax-free.
Traditional 401(k)

Taxes generally come later

A traditional pre-tax elective deferral generally receives its tax advantage when the contribution is made.

  • ✓ Contribution is generally pre-tax.
  • ✓ Current taxable income is generally reduced by the contribution.
  • ✓ Distributions are generally taxable as income.
Tax Rate Consideration

Why future tax rates matter

Roth versus traditional decisions involve the timing of taxes. Your current tax situation, future tax situation, income, contribution amount and retirement circumstances can all affect the comparison.

NOW

Current tax rate

Traditional contributions can generally reduce taxable income today, while Roth contributions are included in current income.

LATER

Future tax rate

Traditional withdrawals are generally taxable, while qualified Roth distributions are generally excluded from gross income.

PLAN

Plan features

Your employer plan determines whether Roth contributions, matching and other features are available.

Employer Match

What happens to the employer match?

The employer match is a separate consideration from whether your own contribution is Roth or traditional.

Your Roth contribution

Your designated Roth elective deferral goes into the designated Roth account.

Employer matching contribution

An employer can use Roth deferrals when calculating a match, but the matching contribution must be allocated to another account rather than directly to the designated Roth account.

Withdrawals

Withdrawal treatment is different

The tax treatment of distributions is one of the most important differences between Roth and traditional 401(k) money.

R

Qualified Roth distribution

Generally excluded from gross income when the applicable five-taxable-year and qualifying-event requirements are met.

T

Traditional distribution

Traditional pre-tax 401(k) distributions are generally included in taxable income when distributed.

!

Nonqualified Roth distribution

A distribution that does not meet the qualified-distribution requirements can receive different tax treatment.

Compare Your Situation

Factors to consider when comparing the two

There isn't one tax treatment that applies identically to every person. These are the major factors to examine.

✓
Current taxable income Consider how traditional pre-tax contributions affect current taxable income.
✓
Expected retirement tax situation Consider the tax treatment you may face when taking distributions.
✓
Contribution amount Roth and traditional contributions share the applicable employee elective-deferral limit.
✓
Employer plan features Check whether your employer offers Roth contributions and how matching works.
✓
Time until retirement The length of time invested can affect how much future growth is involved in the comparison.
✓
Tax diversification Some people use both Roth and traditional retirement savings to create different tax treatment later.
Interactive Comparison

Compare Roth and traditional scenarios

Use the 401k.blog calculator to explore an illustrative comparison based on contribution, growth and tax assumptions.

Roth

After-tax contribution

Explore a scenario where contributions are taxed before entering the account and qualified distributions receive Roth tax treatment.

Traditional

Pre-tax contribution

Explore a scenario where contributions generally receive pre-tax treatment and future distributions are generally taxable.

Related Resources

Continue exploring 401(k) topics

Roth 401(k) Learn how Roth 401(k) contributions and withdrawals work. Roth 401(k) Contribution Limits Understand contribution limits and catch-up rules. Roth 401(k) Tax Benefits Explore the tax treatment of Roth contributions. 401(k) Employer Match Learn how employer matching contributions work. 401(k) Contribution Limits Review current 401(k) contribution rules. 401(k) Calculators Explore the complete calculator collection.
FAQ

Roth 401(k) vs traditional 401(k) FAQ

The primary difference is tax timing. Roth 401(k) contributions are included in gross income when made, while traditional pre-tax elective deferrals generally receive pre-tax treatment. Qualified Roth distributions are generally excluded from gross income, while traditional distributions are generally taxable.
Yes. If your employer's plan offers both options, you can generally allocate your elective deferrals between designated Roth and traditional pre-tax contributions. The combined contributions remain subject to the applicable elective-deferral limit.
No. The IRS states that there is no income limit for making designated Roth 401(k) contributions. This differs from Roth IRA eligibility rules.
Yes. Roth and traditional elective deferrals share the applicable employee elective-deferral limit. Choosing Roth does not create a separate additional 401(k) contribution limit.
An employer can use designated Roth contributions when calculating a matching contribution if the plan provides for matching. The matching contribution must be allocated to another account rather than directly to the designated Roth account.
No. Roth 401(k) distributions must satisfy the requirements for a qualified distribution to receive the generally tax-free treatment. Nonqualified distributions can receive different tax treatment.
Neither. Roth and traditional employee elective deferrals share the same applicable 401(k) elective-deferral limit.
A designated Roth contribution cannot simply be recharacterized as a traditional pre-tax contribution after it has been made. Check your plan rules before making your contribution election.

See the difference with an interactive comparison.

Explore an illustrative Roth versus traditional 401(k) projection using the 401k.blog comparison calculator.

Roth vs Traditional Calculator → All 401(k) Calculators
Educational information: This page provides general educational information about Roth and traditional 401(k) plans and is not tax, legal, investment or financial advice. Tax rules and plan provisions can change and may vary by individual circumstances. Review your plan documents and consult a qualified professional for advice about your situation.
Ask 401K
401k.blog

 Clear guides, useful calculators and practical retirement resources to help you understand your 401(k), contributions, employer matching, Roth options, rollovers and long-term savings.

© Copyright 2026. All Rights Reserved.