Roth after-tax vs. traditional pre-tax Calculator
A traditional pre-tax contribution can be an effective retirement savings tool. Another contribution option may be available in your retirement plan account, the Roth after-tax contribution option. The Roth option allows you to contribute to your retirement plan account on an after-tax basis - and pay no taxes on qualifying distributions when the money is withdrawn. For some investors, this could prove to be a better option than contributing on a pre-tax basis, where deposits are subject to taxes when the money is withdrawn. Even though the calculator below shows Roth 401(k) vs. Traditional 401(k), you can still use this calculator if you have a 403(b) plan and/or a 457(b) plan and your plan offers the Roth after-tax contribution option. Use this calculator to help determine the best option for your retirement.
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Age and retirement plan information: |
Current age
Your current age.
Age at retirement
Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your 401(k). For example, if you retire at age 65, your last contribution occurs when you are actually 64.
Annual contribution
The amount you will contribute to a 401(k) each year. This calculator assumes that you make 12 equal contributions throughout the year at the beginning of each month. The annual maximum for 2025 is $23,500. If you are age 50 or over, a 'catch-up' provision allows you to contribute an additional $7,500 into your account. Beginning in 2025 the SECURE 2.0 Act increases the catch-up contribution for individuals age 60 to 63. For 2025, this is $11,250 instead of $7,500. Beginning in 2026 catch-up contributions must be made as Roth contributions for individuals making more than $145,000 (adjusted for inflation) in the previous year. The current calculator does not incorporate the impact of the Roth requirement which is subject to pending IRS rule finalization and clarification. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. Both the annual maximum and "catch-up" provisions are indexed for inflation.
Some employees are subject to another form of contribution limits. Employees classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall 401(k) participation. If you expect your salary to be $160,000 or more in 2025 or was $155,000 or more in 2024, you may need to contact your employer to see if these additional contribution limits apply to you.
Invest traditional tax-savings
Check this box to invest any tax savings generated by contributions to a traditional 401(k). By investing your tax savings each year, you equalize the total cash flow between the two account types. For example, if you have a 25% income tax rate and contribute $1,000 to your retirement account, the actual cost after taxes would be $750 for the traditional contribution and $1,000 for the Roth contribution. If you do not wish to invest the difference, you are actually "spending" more per year with the Roth option and the end result will greatly favor a Roth-type savings plan. You may wish to leave this box unchecked if you have no ability or desire to create an additional investment account outside of your 401(k).
Maximize contributions
Check this box to increase all contributions to the maximum allowed each year. This will include future years that qualify for catch-up contributions. The annual maximum for 2025 is $23,500. If you are age 50 or over, a 'catch-up' provision allows you to contribute an additional $7,500 into your account. Beginning in 2025 the SECURE 2.0 Act increases the catch-up contribution for individuals age 60 to 63. For 2025, this is $11,250 instead of $7,500. Beginning in 2026 catch-up contributions must be made as Roth contributions for individuals making more than $145,000 (adjusted for inflation) in the previous year. The current calculator does not incorporate the impact of the Roth requirement which is subject to pending IRS rule finalization and clarification.
Investment return and taxes: |
Expected rate of return
The annual rate of return for your 401(k) account. This calculator assumes that your return is compounded annually and your deposits are made monthly. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2021, had an annual compounded rate of return of 13.6%, including reinvestment of dividends. From January 1, 1970 to December 31st 2021, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 11.3% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009).
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.
Current tax rate
The current marginal income tax rate you expect to pay on your taxable investments. Use the table below to assist you in determining your current tax rate. Use the ‘Filing Status and Federal Income Tax Rates on Taxable Income’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $23,850 | $0 - $11,925 | $0 - $17,000 | $0 - $11,925 |
| 12% | $23,850 - $96,950 | $11,925 - $48,475 | $17,000 - $64,850 | $11,925 - $48,475 |
| 22% | $96,950 - $206,700 | $48,475 - $103,350 | $64,850 - $103,350 | $48,475 - $103,350 |
| 24% | $206,700 - $394,600 | $103,350 - $197,300 | $103,350 - $197,300 | $103,350 - $197,300 |
| 32% | $394,600 - $501,050 | $197,300 - $250,525 | $197,300 - $250,500 | $197,300 - $250,525 |
| 35% | $501,050 - $751,600 | $250,525 - $626,350 | $250,500 - $626,350 | $250,525 - $375,800 |
| 37% | Over $751,600 | Over $626,350 | Over $626,350 | Over $375,800 |
| *Caution: Do not use these tax rate schedules to figure 2024 taxes. Use only to figure 2025 estimates. Source: Rev. Proc. 2024-40 | ||||
Retirement tax rate
The marginal tax rate you expect to pay on your investments at retirement.
After-Tax Total At Retirement |
After-Tax Comparison |
Definitions
Current age
Your current age.
Age at retirement
Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your 401(k). For example, if you retire at age 65, your last contribution occurs when you are actually 64.
Annual contribution
The amount you will contribute to a 401(k) each year. This calculator assumes that you make 12 equal contributions throughout the year at the beginning of each month. The annual maximum for 2025 is $23,500. If you are age 50 or over, a 'catch-up' provision allows you to contribute an additional $7,500 into your account. Beginning in 2025 the SECURE 2.0 Act increases the catch-up contribution for individuals age 60 to 63. For 2025, this is $11,250 instead of $7,500. Beginning in 2026 catch-up contributions must be made as Roth contributions for individuals making more than $145,000 (adjusted for inflation) in the previous year. The current calculator does not incorporate the impact of the Roth requirement which is subject to pending IRS rule finalization and clarification. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. Both the annual maximum and "catch-up" provisions are indexed for inflation.
Some employees are subject to another form of contribution limits. Employees classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall 401(k) participation. If you expect your salary to be $160,000 or more in 2025 or was $155,000 or more in 2024, you may need to contact your employer to see if these additional contribution limits apply to you.
Invest traditional tax-savings
Check this box to invest any tax savings generated by contributions to a traditional 401(k). By investing your tax savings each year, you equalize the total cash flow between the two account types. For example, if you have a 25% income tax rate and contribute $1,000 to your retirement account, the actual cost after taxes would be $750 for the traditional contribution and $1,000 for the Roth contribution. If you do not wish to invest the difference, you are actually "spending" more per year with the Roth option and the end result will greatly favor a Roth-type savings plan. You may wish to leave this box unchecked if you have no ability or desire to create an additional investment account outside of your 401(k).
Maximize contributions
Check this box to increase all contributions to the maximum allowed each year. This will include future years that qualify for catch-up contributions. The annual maximum for 2025 is $23,500. If you are age 50 or over, a 'catch-up' provision allows you to contribute an additional $7,500 into your account. Beginning in 2025 the SECURE 2.0 Act increases the catch-up contribution for individuals age 60 to 63. For 2025, this is $11,250 instead of $7,500. Beginning in 2026 catch-up contributions must be made as Roth contributions for individuals making more than $145,000 (adjusted for inflation) in the previous year. The current calculator does not incorporate the impact of the Roth requirement which is subject to pending IRS rule finalization and clarification.
Expected rate of return
The annual rate of return for your 401(k) account. This calculator assumes that your return is compounded annually and your deposits are made monthly. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2021, had an annual compounded rate of return of 13.6%, including reinvestment of dividends. From January 1, 1970 to December 31st 2021, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 11.3% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009).
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.
Current tax rate
The current marginal income tax rate you expect to pay on your taxable investments. Use the table below to assist you in determining your current tax rate. Use the ‘Filing Status and Federal Income Tax Rates on Taxable Income’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $23,850 | $0 - $11,925 | $0 - $17,000 | $0 - $11,925 |
| 12% | $23,850 - $96,950 | $11,925 - $48,475 | $17,000 - $64,850 | $11,925 - $48,475 |
| 22% | $96,950 - $206,700 | $48,475 - $103,350 | $64,850 - $103,350 | $48,475 - $103,350 |
| 24% | $206,700 - $394,600 | $103,350 - $197,300 | $103,350 - $197,300 | $103,350 - $197,300 |
| 32% | $394,600 - $501,050 | $197,300 - $250,525 | $197,300 - $250,500 | $197,300 - $250,525 |
| 35% | $501,050 - $751,600 | $250,525 - $626,350 | $250,500 - $626,350 | $250,525 - $375,800 |
| 37% | Over $751,600 | Over $626,350 | Over $626,350 | Over $375,800 |
| *Caution: Do not use these tax rate schedules to figure 2024 taxes. Use only to figure 2025 estimates. Source: Rev. Proc. 2024-40 | ||||
Retirement tax rate
The marginal tax rate you expect to pay on your investments at retirement.
After tax total at retirement
For the Roth 401(k), this is the total value of the account. For the traditional 401(k), this is the sum of two parts: 1) The value of the account after you pay income taxes on all earnings and tax-deductible contributions and 2) what you would have earned if you had invested (in an ordinary taxable account) any income tax savings.
RO 3652605 (6/2024)