Roth vs Traditional 401(k): Which One Saves You More? (2026)
On a $70,000 salary, a 10% traditional 401(k) saves about $1,190 in federal tax this year; a Roth saves it later. How to choose, with 2026 limits.
By the MoneyBackKit team · Updated October 27, 2026 · 6 min read
Most 401(k) plans now let you choose: traditional (pre-tax) or Roth (after-tax). The money goes into the same investments either way. The only difference is when you pay income tax: now, or when you take the money out in retirement. Here's how to decide, with 2026 numbers.
The difference in one table
| Traditional 401(k) | Roth 401(k) | |
|---|---|---|
| Tax on what you put in | None now: lowers this year's taxable income | Taxed now, like the rest of your pay |
| Tax on growth | None while it stays in the plan | None while it stays in the plan |
| Tax when you take it out | Taxed as income | Tax-free if you're 59½+ and the account is 5+ years old |
| Best when | Your tax rate is higher now than it will be in retirement | Your tax rate is lower now than it will be later |
What a traditional contribution saves you today
On a $70,000 salary, putting 10% ($7,000) into a traditional 401(k) cuts your federal income tax this year by about $1,190, because that money comes off the top of your income, where your marginal rate is 22%.
| Salary | 10% contribution | Federal tax saved this year | Your bracket |
|---|---|---|---|
| $50,000 | $5,000 | $600 | 12% |
| $70,000 | $7,000 | $1,190 | 22% |
| $100,000 | $10,000 | $2,200 | 22% |
| $150,000 | $15,000 | $3,600 | 24% |
With a Roth you don't get that saving now. Instead, every dollar you take out later, including all the growth, is tax-free. If $7,000 a year grows at 7% from age 30 to 65 (with a 50% match on the first 6% of pay and 2% raises), the account could reach about $1,634,428. With a Roth, the part you contributed and its growth come out tax-free; with traditional, all of it is taxed as income when you withdraw.
How to choose
- Early career, lower income: Roth often wins. Your bracket is low now (12% at $50,000), and your income and tax rate will likely rise.
- Peak earning years: traditional often wins. Saving 24% or more now is worth a lot, and many people drop to a lower bracket in retirement.
- Not sure? Split it. Many plans let you send part to each, so you have both taxable and tax-free money to draw from later.
- Either way, get the full match. An employer match is the best return you'll find. Matching contributions usually go into the traditional side.
2026 limits
- Up to $24,500 of your own contributions (traditional and Roth together).
- Age 50+: another $8,000 catch-up. Ages 60–63: a larger catch-up of $11,250 instead.
- Roth 401(k) money no longer has required minimum distributions during your lifetime.