Roth or traditional 401(k)? The answer is one number

The whole debate, compressed

Traditional 401(k): money goes in before tax, grows, and you pay income tax when you withdraw it in retirement.

Roth 401(k): money goes in after tax, grows, and you never pay tax on it again.

Same money, same growth rate, same investments. The only difference is which tax bill you pay: now or later.

The math is embarrassingly simple

Say you're in the 24% bracket now and expect to be in the 24% bracket in retirement. Put $10,000 into a traditional account, grow it for 30 years at 7%, withdraw it later and pay 24%: you keep $10,000 × (1.07)^30 × (1 − 0.24).

Put that same $10,000 into a Roth after paying 24% today, grow it 30 years, withdraw tax free: $10,000 × (1 − 0.24) × (1.07)^30.

Those are the same number. It's algebra, not opinion. The growth rate cancels out. What's left is a straight comparison of the two rates.

Our Roth vs Traditional calculator shows this exact result, plus the breakeven rate for your own numbers.

When the answer stops being a tie

It stops being a tie when your retirement tax rate differs from today's. Which it usually does.

Most people retire into a lower bracket. Less income, no paycheck, fewer taxes. For them, traditional wins almost every time, because you're deliberately paying tax on a smaller income later.

But there's a catch that bumps a lot of people into higher brackets in retirement: required minimum distributions. Once you turn 73, the IRS forces you to withdraw a growing percentage of your retirement accounts every year, whether you need the money or not. A big traditional balance plus Social Security plus maybe a pension can push you right back into your working bracket, sometimes higher. That's exactly the case where Roth wins.

The honest way to decide

Don't guess the future. Look at your two brackets and compute the breakeven, which the calculator above does in one click. Pick traditional if you expect your retirement rate to be lower. Pick Roth if you expect it higher. And if you genuinely can't predict it, splitting contributions between both is a reasonable way to hedge, which is honestly what most people I respect end up doing.