The core idea
If your tax rate in retirement is lower than it is now, a traditional account usually wins. If it will be higher, a Roth usually wins. If the rates are equal, they come out the same.
Here C is the yearly traditional contribution and "growth" is how much each dollar grows by retirement. Putting C into a traditional account costs you the same take-home pay as putting C × (1 − rate now) into a Roth.
2026 contribution limits
| Account | Limit (2026) | Catch-up at 50+ |
|---|---|---|
| 401(k), 403(b), 457 | $24,500 | $8,000 ($11,250 at 60–63) |
| IRA (Roth or traditional) | $7,500 | $1,100 |
Roth IRA contributions phase out at higher incomes, and from 2026 workers who earned over about $150,000 must make 401(k) catch-up contributions as Roth. Source: IRS Notice 2025-67.
Things the math leaves out
- Roth IRAs have no required minimum distributions during your lifetime.
- You can withdraw Roth IRA contributions (not earnings) at any time without tax or penalty.
- Having both kinds of accounts gives you flexibility to manage your tax bracket in retirement.
Frequently asked questions
How do I guess my tax rate in retirement?
Many retirees have less income than when they worked, so their rate drops. But large savings, pensions, Social Security, and future tax law changes can push it up. If you're unsure, splitting between both is a reasonable hedge.
Is my 401(k) match Roth or traditional?
Employer matches have traditionally gone into a pre-tax account. Some plans now let you choose to receive the match as Roth.