Regular 401(k) vs Roth 401(k) Calculator

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This calculator compares the results of contributing to a regular 401(k) versus a Roth 401(k) (a designated Roth account).

Example

A taxpayer is offered an opportunity to contribute to a Roth 401(k) at his current employer. What tax savings are available?

Field Input
Monthly gross pay $7,200
Employee contribution rate 14.00%
Employer match rate 4.00%
Federal tax rate 25.0%
State tax rate 4.00%
State tax deducted on federal return? Yes
Years of contributions 26
Annual rate of return 8.00%
Combined tax rate during retirement 25.00%
Years of retirement 30
Annual rate of return during retirement 4.00%

In this example, the results show that the individual would have a combined total of $1,553,944 if they contributed to a 401(k) and taxable account at retirement. If the individual contributed to a Roth 401(k) they would have a combined total of $1,350,964 at retirement. During retirement they would have a higher combined after-tax monthly income of $6,091 from the Roth 401(k) versus $5,706 from the Regular 401(k).

Footnotes

  1. The tax savings related to making a pre-tax contribution to a regular 401(k) is assumed to be invested in a taxable account.
  2. An employer match to a Roth 401(k) contribution must be contributed to a regular 401(k) account.

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