After-tax advantage at retirementTraditional +$61,562
Roth $632,490 vs traditional path $694,053 after 25 years. Tie retirement tax rate: 27.7%. Traditional winsAt these inputs, a traditional 401(k) plus investing the annual tax break leaves $61,562 more spendable money after 25 years ($694,053 vs $632,490).
2026 401(k) statutory limit for under age 50: $24,500 a year (IRS Notice 2025-67). Your $10,000 contribution is within the limit.
Roth 401(k)
You put in $10,000 a year of after-tax pay ($250,000 over 25 years). You get no tax deduction today at your 30.5% combined rate.
At 7% a year, the account grows to $632,490. Qualified withdrawals in retirement owe $0 in federal or state income tax, leaving $632,490 spendable.
Traditional 401(k) + invested tax break
You put in $10,000 a year pre-tax. The account grows to $632,490, then pays 18.0% income tax at withdrawal ($113,848), leaving $518,642 inside the plan.
Deducting the contribution at 30.5% saves $3,050 a year in tax today. Investing that tax break grows to $192,910, or $175,411 after 15.0% capital gains tax ($17,499), bringing total spendable wealth to $694,053.
Roth spendable balance$632,490
Roth 401(k) after 25 years (100% tax-free) Traditional + tax break$694,053
$518,642 plan + $175,411 invested tax break Break-even retirement tax rate27.7%
Combined retirement rate where both tie (you entered 18.0%) Upfront tax saved a year$3,050/yr
Saved at 30.5% and invested ($175,411 after capital gains tax) Where every dollar goes
Side-by-side accounting of contributions, investment growth, retirement income taxes, and the taxable side account.
Side-by-side breakdown of contributions, growth, taxes, and spendable retirement balances for Roth and traditional| Line | Roth | Traditional path |
|---|
| Annual contribution (capped at 2026 limit) | $10,000 | $10,000 |
|---|
| Upfront tax saved each year at 30.5% | $0 | $3,050 |
|---|
| Total contributions over 25 years | $250,000 | $250,000 |
|---|
| Pre-tax account balance at retirement | $632,490 | $632,490 |
|---|
| Retirement income tax at 18.0% | $0 | -$113,848 |
|---|
| After-tax retirement plan balance | $632,490 | $518,642 |
|---|
| Taxable side account (before capital gains tax) | $0 | $192,910 |
|---|
| Capital gains tax on side account (15.0%) | $0 | -$17,499 |
|---|
| Taxable side account (after tax) | $0 | $175,411 |
|---|
| Total spendable after-tax balance | $632,490 | $694,053 |
|---|
How the winner changes across retirement tax rates
Both paths tie when your combined retirement tax rate equals 27.7%. Below that rate, traditional wins; above it, Roth wins.
Spendable after-tax balance for Roth and traditional across retirement tax rates from 0% to 37%| Retirement tax rate | Roth after tax | Traditional plan after tax | Invested tax break after tax | Traditional total | Winner and margin |
|---|
| 0.0% | $632,490 | $632,490 | $175,411 | $807,901 | Traditional by $175,411 |
|---|
| 10.0% | $632,490 | $569,241 | $175,411 | $744,652 | Traditional by $112,162 |
|---|
| 12.0% | $632,490 | $556,592 | $175,411 | $732,002 | Traditional by $99,512 |
|---|
| 18.0% (yours) | $632,490 | $518,642 | $175,411 | $694,053 | Traditional by $61,562 |
|---|
| 22.0% | $632,490 | $493,342 | $175,411 | $668,753 | Traditional by $36,263 |
|---|
| 24.0% | $632,490 | $480,693 | $175,411 | $656,103 | Traditional by $23,613 |
|---|
| 28.0% | $632,490 | $455,393 | $175,411 | $630,804 | Roth by $1,687 |
|---|
| 32.0% | $632,490 | $430,093 | $175,411 | $605,504 | Roth by $26,986 |
|---|
| 37.0% | $632,490 | $398,469 | $175,411 | $573,880 | Roth by $58,611 |
|---|
Spendable after-tax balance by year
The chart and its table twin below track spendable after-tax wealth at the end of each year if liquidated at your retirement tax rate.
Roth (after tax)Traditional + tax break (after tax)
Year-by-year cumulative contributions and after-tax balances for Roth and traditional| Year | Cumulative contributed | Roth after tax | Traditional plan after tax | Side account after tax | Traditional total | Roth ahead (+) or behind (-) |
|---|
| 1 | $10,000 | $10,000 | $8,200 | $3,050 | $11,250 | -$1,250 |
|---|
| 2 | $20,000 | $20,700 | $16,974 | $6,282 | $23,256 | -$2,556 |
|---|
| 3 | $30,000 | $32,149 | $26,362 | $9,710 | $36,073 | -$3,924 |
|---|
| 4 | $40,000 | $44,399 | $36,408 | $13,349 | $49,757 | -$5,357 |
|---|
| 5 | $50,000 | $57,507 | $47,156 | $17,213 | $64,369 | -$6,862 |
|---|
| 6 | $60,000 | $71,533 | $58,657 | $21,318 | $79,975 | -$8,442 |
|---|
| 7 | $70,000 | $86,540 | $70,963 | $25,680 | $96,643 | -$10,103 |
|---|
| 8 | $80,000 | $102,598 | $84,130 | $30,318 | $114,449 | -$11,851 |
|---|
| 9 | $90,000 | $119,780 | $98,219 | $35,251 | $133,471 | -$13,691 |
|---|
| 10 | $100,000 | $138,164 | $113,295 | $40,499 | $153,794 | -$15,630 |
|---|
| 11 | $110,000 | $157,836 | $129,426 | $46,085 | $175,510 | -$17,674 |
|---|
| 12 | $120,000 | $178,885 | $146,685 | $52,031 | $198,717 | -$19,832 |
|---|
| 13 | $130,000 | $201,406 | $165,153 | $58,365 | $223,518 | -$22,111 |
|---|
| 14 | $140,000 | $225,505 | $184,914 | $65,112 | $250,026 | -$24,521 |
|---|
| 15 | $150,000 | $251,290 | $206,058 | $72,301 | $278,359 | -$27,069 |
|---|
| 16 | $160,000 | $278,881 | $228,682 | $79,964 | $308,646 | -$29,766 |
|---|
| 17 | $170,000 | $308,402 | $252,890 | $88,133 | $341,023 | -$32,621 |
|---|
| 18 | $180,000 | $339,990 | $278,792 | $96,845 | $375,637 | -$35,647 |
|---|
| 19 | $190,000 | $373,790 | $306,508 | $106,136 | $412,644 | -$38,854 |
|---|
| 20 | $200,000 | $409,955 | $336,163 | $116,049 | $452,212 | -$42,257 |
|---|
| 21 | $210,000 | $448,652 | $367,894 | $126,625 | $494,520 | -$45,868 |
|---|
| 22 | $220,000 | $490,057 | $401,847 | $137,913 | $539,760 | -$49,703 |
|---|
| 23 | $230,000 | $534,361 | $438,176 | $149,962 | $588,138 | -$53,777 |
|---|
| 24 | $240,000 | $581,767 | $477,049 | $162,824 | $639,873 | -$58,106 |
|---|
| 25 | $250,000 | $632,490 | $518,642 | $175,411 | $694,053 | -$61,562 |
|---|
What changes the answer most
These two assumptions move the after-tax gap between Roth and traditional the most when shifted one at a time.
- If your retirement federal tax rate were 5 percentage points higher, it would shift the balance toward Roth by $31,625; 5 percentage points lower, it would shift the balance toward traditional by $31,625.
- If your current federal tax rate were 5 percentage points higher, it would shift the balance toward traditional by $28,756; 5 percentage points lower, it would shift the balance toward Roth by $28,756.
How this estimates
2026 statutory contribution caps. Under IRS Notice 2025-67 (checked 2026-10-18), the 2026 elective deferral limit for a 401(k), 403(b) or governmental 457(b) plan is $24,500 under age 50, $32,500 at age 50 and over ($8,000 catch-up), and $35,750 at ages 60 to 63 ($11,250 catch-up). For an IRA, the 2026 limit is $7,500 under age 50 and $8,600 at age 50 and over ($1,100 catch-up).
Roth vs traditional math. Each year, your capped contribution compounds at the annual return you enter. A qualified Roth distribution owes $0 in income tax at retirement (IRS Publication 590-B). A traditional distribution is taxed at your combined federal and state retirement tax rate. Meanwhile, deducting a traditional contribution saves contribution * currentTaxRate each year. When you choose to invest that tax break, those annual savings compound in a taxable brokerage account and pay long-term capital gains tax (IRS Topic 409) on the investment gain at retirement.
Break-even retirement tax rate. The tie rate is the combined retirement income tax rate where the traditional plan after tax plus the after-tax side account equals the tax-free Roth balance. Because the side account pays capital gains tax on its growth, the break-even retirement rate is slightly lower than your current marginal tax rate.
What this leaves out
Modified AGI phase-outs for traditional IRA deductibility and direct Roth IRA contributions (IRS Publication 590-A), annual dividend tax drag inside the taxable brokerage account before retirement, Required Minimum Distributions (RMDs) on traditional accounts starting at age 73 or 75, Medicare IRMAA surcharges, Social Security benefit taxation interactions, and the SECURE 2.0 Roth catch-up requirement for high W-2 earners over $150,000.
Sources and date checked
Statutory 2026 contribution limits were checked on 2026-10-18 against IRS Notice 2025-67, IRS Publication 590-A, IRS Publication 590-B, IRS federal brackets, and New York State tax tables.
An estimate from the numbers you typed. Not tax, legal or investment advice. Confirm your eligibility and tax rules with the IRS and a qualified tax preparer.
Benchmark sources and dates
Starting assumptions are example benchmarks, not binding quotes. Change any input to match your own bills or offers.
| Assumption / Input | Starting value | Source | Checked |
|---|
| 2026 401(k), 403(b) and most 457 plan elective deferral limit (under age 50) | $24,500 a year | IRS Notice 2025-67 | 2026-10-18 |
| 2026 401(k) catch-up contribution limit (age 50 and over, except 60 to 63) | +$8,000 a year ($32,500 total) | IRS Notice 2025-67 | 2026-10-18 |
| 2026 401(k) higher catch-up limit for ages 60, 61, 62 and 63 | +$11,250 a year ($35,750 total) | IRS Notice 2025-67 | 2026-10-18 |
| 2026 IRA contribution limit (under age 50) and age 50+ catch-up | $7,500 under age 50; +$1,100 catch-up at age 50 and over ($8,600 total) | IRS Notice 2025-67 | 2026-10-18 |
| Traditional and Roth IRA rules and qualified distributions | Statutory rules | IRS Publication 590-A and IRS Publication 590-B | 2026-10-18 |
| Federal marginal tax rate now and effective federal rate in retirement | 24% now, 18% in retirement (typical, edit this) | IRS Federal Income Tax Rates and Brackets | 2026-10-18 |
| State tax rate now and in retirement | 6.5% now, 0% in retirement (typical, edit this) | NY State Department of Taxation and Finance: Personal income tax rates and Form IT-201-I pension and annuity income exclusion | 2026-10-18 |
| Long-term capital gains tax rate on invested tax break | 15% (typical, edit this) | IRS Topic No. 409, Capital Gains and Losses | 2026-10-18 |
| Annual contribution, years to retirement, and annual return | $10,000 a year, 25 years, 7.0% a year (typical, edit this) | Typical planning assumptions | 2026-10-18 |