: Employee (salary deferral) and/or employer (profits sharing) contributions are made with pre-tax dollars. How To Save More Than 100 000 A Year Pre Tax In Retirement. Sep Ira Vs Simple Ira How To Choose The Right Plan 2018 . Roth 401k vs. Traditonal 401k Using $10,000 From Gross Income. Compare a Roth IRA vs a traditional IRA with this comparison table. Our Roth vs. The key difference between a traditional and a Roth account is taxes. While the Roth 401k ends up just over $2.5 million. Unlike the traditional IRA, there is no up-front deduction of tax to the contributions made to Roth IRA. Learning Center / Financial Calculators / Traditional 401k vs Roth 401k. They all offer tax benefits for your retirement savings—like the potential for tax-deferred or tax-free growth. For a fairer comparison, I’ll run calculations that measure the tax savings generated by traditional contributions and the tax benefits of Roth withdrawals in retirement. Investing to Thrive®, owned by Hall and Rowe Media, LLC is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program. The primary factor to consider is whether your marginal tax rate will be higher or lower during retirement. I should consider monitoring account balances and making adjustments as I move closer to retirement. A growing number of employers are beginning to offer not only a Traditional 401K, but now a Roth 401K as well. With a traditional … TRADITIONAL IRA . Ellevest isn’t a tax pro, so we can’t tell you exactly what’s right for you. Even if I must take RMDs from a traditional 401(k) and my combined income results in taxation of some Social Security benefits, I could benefit from the early tax savings and compound growth associated the traditional approach. Use a comparison chart to learn how to save money for your retirement with traditional and Roth IRAs. Traditional 401(k) vs Roth 401(k) Is a Traditional 401(k) or a Roth 401(k) best for you? I know taxes can be confusing (not to mention a pain to pay! The Roth 401(k) allows you to contribute to your 401(k) account on an after-tax basis - and pay no taxes on qualifying distributions when the money is withdrawn. A 401(k) contribution can be an effective retirement tool. The investment choices, administrative fees, etc. ), so let’s start with a simple definition and then we’ll dive into the details. Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made: * This limitation is by individual, rather than by plan. Investing tax savings generated by making traditional 401(k) contributions can allow me to accumulate investments to fund my tax bill in retirement. Roth Ira Regular Ira 401 K Sep Hsa Or 529 Plan A Chart. In our retirement years, we’ll avoid income taxes when we take money from the Roth 401(k). Any mentions and detailed reviews are my own honest opinion. Traditional and Roth IRAs allow you to save money for retirement. So, basically the deciding factor is the tax bracket you are in today. 401(k) vs. Roth 401(k): How are They Different? Employees who already have a regular 401k plan can participate in a Roth 401k if the employer offers it. I am still on the fence about Traditional vs Roth IRA, and additionally Traditional vs Roth TSP. Your email address will not be published. 401K / Retirement. A 401(k) contribution can be an effective retirement tool. Post was not sent - check your email addresses! ROTH IRA. In this scenario, money is withdrawn from the Roth IRA to make tax payments only. Let’s see how retirement account balances might grow, given the following assumptions: In my first sheet (Income + Savings | Working) within the spreadsheet are the numbers to illustrate this scenario. You can click each for help. In 2013, you can only contribute to a Roth IRA if your annual income is below $127,000 (single) or $188,000 (married). These resources may be helpful for those who want to create scenarios and run numbers that represent their situations: Tax regulations also allow retirement savers with investments held in a Roth 401(k) to do a tax-free rollover into a Roth IRA. The central difference between a Roth 401 (k) and traditional 401 (k) is the tax treatment of your contributions. The big points are highlighted on the chart below—contribution limits, income limits, and mandatory retirement age. Learn how your comment data is processed. Start simple, with your age and income. 3 Reasons A 401 K Plan Is Better Than A Simple Ira. Of course it makes more sense to have a million dollars in a Roth account (which we can withdraw tax-free) vs. the same amount in a traditional account (on which we’ll pay taxes). The limit for annual contributions to a Roth 401(k) is $17,500 in 2013, while the limit for annual contribution to a Roth IRA is $5,500 in 2013. But which is better? On a Roth 401(k) account, you won’t get a tax deduction on your contribution, however your money increases tax-free similar to a Roth IRA. should be the same for both Roth and traditional accounts within a certain employer’s 401(k) plan. Investing in accounts with various tax structures (being. This move allows retirees to skip required minimum distributions (RMDs). You can contribute to a Roth IRA at any age. You can contribute to both. Current … Call 866-855-5636 or open a Schwab IRA today. Comparing the Roth 401(k) to a Traditional 401(k) We know Roth 401(k)s can seem confusing if you’re not familiar with them. Traditional IRA Calculator can help you decide. the beginners guide to retirement 401 k ira, traditional ira vs roth ira the best choice for early, roth 401k and roth ira retirement plans conversion limits, where should i put my retirement money roth 401k vs roth, roth ira vs roth 401 k simplefinancialfreedom com roth Is there an age limit? Welcome! Putting this money inside a Roth IRA will allow me to withdraw funds tax-free in retirement, helping to preserve wealth. This is a comparison between 401(k), Roth 401(k), and Traditional Individual Retirement Account and Roth Individual Retirement Account accounts, four different types of retirement savings vehicles that are common in the United States. Retirement accounts like 401(k)s, 403(b)s, and IRAs have a lot in common. Effective limit is higher compared to traditional 401k as … As an Amazon Associate I earn from qualifying purchases. Traditional vs. Roth 401(k) / 403(b) / 457(b) Calculator This tool compares the hypothetical results of investing in a Traditional (pre-tax) and a Roth (after-tax) retirement plan. In this illustration, the retirement saver will owe taxes on Social Security benefits with a traditional 401(k) but avoid taxes on these benefits with the Roth 401(k). For those with a traditional 401(k) and both the ability and foresight to fund a Roth IRA, the Roth IRA can become the source of funds for tax payments in retirement. Benefits ; Withdrawal Rules ; Contribution Limits ; Roth 401(k) vs. For quick trivia: The Roth accounts are named for this guy, the Delaware Senator who created the Roth IRA in 1997.. Roth 401(k)s vs. Roth IRAs. If you are considering contributing to a Traditional or Roth IRA (or 401k), you may have already heard that the main difference is whether the contributions are made pre-tax or after tax.Also, you should have been told that one of the main considerations is whether you think your income tax bracket during retirement will be higher or lower than your current tax bracket. This is a big difference between Roth IRA vs. 401K or traditional IRA. In this video I compare the traditional 401k and Roth 401k plan and discuss when it makes sense to contribute to these plan. for my wife, that could mean putting it into the solo 401k one day and rolling it to the traditional IRA and then the Roth over the next days. : Roth IRA contributions are made with after-tax dollars. This chart highlights some of their similarities and differences. Contributions to a Traditional 401(k) plan are made on a pre-tax basis, resulting in a lower tax bill and higher take home pay. Use this calculator to help compare employee contributions to the new after-tax Roth 401(k) and the current tax-deductible 401(k). Simplifying the traditional vs. Roth decision Given that the timing of taxes is the most important thing when deciding between a traditional 401(k) and a Roth … Here’s what we can tell you: If you think your tax rates are going to go up in retirement, consider the Roth. In addition, the money invested within either can grow tax-free. Traditional 401(k) vs Roth 401(k) Is a Traditional 401(k) or a Roth 401(k) best for you? Benchmark Performance, Financial Goals: How to Reach Them (Basic Formulas). Compare a Roth IRA vs a traditional IRA with this comparison table. (As a bonus, you’ll receive 4 Ways to Invest for free.). Are you funding a traditional account, Roth account, or both? Real Money Example: Traditional vs. Roth Full Comparison Of Retirement Accounts Solo 401k Sep Ira. My husband’s employer recently introduced a Roth 401(k) choice in addition to its Traditional 401(k) plan. Traditional 401k, read this. It’s easy but too simplistic to look at this type of result and declare victory for the Roth. Roth IRA is a special type of retirement account that can be funded by the people with their post-tax income. Comparison of Roth Solo 401(k), Roth IRA, and Pre-tax Solo 401(k): Characteristic: Roth Solo 401k Account: Roth IRA: Pre-Tax Solo 401(k) Contributions: Employee (salary deferral) contributions are made with post-tax dollars. T. Rowe Price has an article Evaluating Roth and Pretax Retirement Savings Options by Roger Young that covers the basics on the choice between a “Traditional” pretax or Roth IRA or 401k account:. Roth Vs. roth ira vs traditional ira which is better for you, whats best traditional ira vs roth ira familywealth, do you have the right ira for your retirement daveramsey com, can i make 401k or ira to roth ira conversions in 2012 and, rollover 401k vs roth ira gold investment You put in after-tax money into the Roth 401k, and it grows over time tax free. We’re focusing on comparing Roth 401(k)s and traditional 401(k)s, but how does the Roth 401k differ from the Roth IRA, every blogger’s favorite retirement account? Call 866-855-5636 or open a Schwab IRA today. Especially those with HSA’s offered through their employer’s cafeteria plan (pre-FICA). do you have the right ira for your retirement daveramsey com, whats the difference between a roth ira and a traditional ira, traditional ira vs roth ira the best choice for early, roth ira vs traditional ira headwater investment consulting, roth 401k and roth ira retirement plans conversion limits I’m a writer, business-finance grad, and investor here to help people like you invest without fear. How a Roth Versus Traditional IRA Comparison is Made. Traditional IRA depends on your income level and financial goals. We do not guarantee the accuracy of the results or their relevance to your particular circumstances. annual earnings during working years prior to retirement, annual income in retirement: Social Security benefits plus withdrawals and required minimum distributions (RMDs) from retirement accounts, tax filing status during working and retirement years, reductions to taxable income: deductions, personal exemptions (no longer available), and tax breaks for retirement contributions, investment growth rates during working years and retirement, use of extra cash generated from tax savings to fund a Roth IRA, number of years in the workforce and retirement, investment income generated from holdings in regular investment accounts, pension benefits, rental property income, and other types of income in retirement, special situations that change taxable income (special exemptions, etc. The dollar amount of investments within each account makes a difference in the effectiveness of the strategy. Designated Roth employee elective contributions are made with after-tax dollars. Since contributions to Roth IRAs are not deductible from taxable income, then to make, say a $1,000 contribution, you must pay the taxes on the $1,000 out of your other income. For a detailed overview of Traditional VS Roth IRAs click on the link below: Traditional IRA VS Roth IRA. Designated Roth 401(k) Roth IRA. At first glance, I’d be happy about the higher net worth associated with the traditional 401(k) plan. As of January 2006, there is a new type of 401(k) - the Roth 401(k). Compare a Roth 401(k) to a Traditional 401(k) Your retirement income can vary widely depending on what type of account holds your savings and what assumptions you make about return and tax rates during the accumulation and withdrawal periods. Here are my assumptions: The first step for the retirement calculations is to monitor the value of my 401(k). I’ve seen analyses that compare the value of say $1 million in a Roth account vs. the same amount in a traditional one. This article is written for entertainment purposes only and should not be construed as financial or any other type of professional advice. The Traditional 401k comes in just over $2.9 million. While this reduces your taxable income now, you'll pay regular income tax … If the money had been placed in a traditional 401(k) account, annual tax savings of $2,200 could be channeled to a Roth IRA and this account would grow to $249,223.06. Roth 401(k)s vs. Roth IRAs. Generally, the debate about the type of account to fund centers on whether our tax rate will be higher while 1) we’re working or 2) we’re spending in retirement. The turbo tax calculator doesn’t let you put kids etc. Your email address will not be published. My hope is to roll about $7K-9K from the tax deferred accounts to the Roths each year. roth 401k might make you richer millennial money, roth ira or traditional ira or 401 k fidelity, roth ira best retirement plan plans accounts of the simple, roth ira vs traditional ira … No requirement to start taking distributions while owner is alive. If you are age 50 or over, the catch-up contribution is additional $6,000 in 2019. The account balance of the 401(k) — whether traditional or Roth — would grow to $1,132,832.11. in so it’s difficult to tell exactly what bracket you land in. Roth VS Traditional IRA. Sorry, your blog cannot share posts by email. Like most tax calculations, determining whether I’ll owe taxes on Social Security benefits can be complicated; basically, though, if my combined income (regular income plus half of Social Security) exceeds a certain threshold (such as $34,000 for a taxpayer filing single) then I’ll owe taxes on a large percentage of my benefits. Your retirement income can vary widely depending on what type of account holds your savings and what assumptions you make about return and tax rates during the accumulation and withdrawal periods. When it comes to selecting the best IRA, there are two options: traditional IRAs and Roth IRAs.Depending on your financial situation and retirement plan, either IRA can be a viable choice. Per FTC guidelines, I need to tell you that I may be compensated through advertising or affiliate programs on this website. I’m thinking 15%, but can’t be sure. I’m Julie. The first line shows the gross $10,000 annual contribution in both accounts. Rolled over a Roth 401(k) or Roth 403(b) to the Roth IRA. If your tax rate will be higher later, paying taxes now with the Roth makes sense. Roth 401(k), Roth IRA, and Pre-tax 401(k) Retirement Accounts . When you contribute to a traditional 401k, you use pre-tax money, and it also grows tax free over time. This site uses Akismet to reduce spam. Getting back to the original question, there is no right answer on the Roth vs. Traditional 401(k) Calculator. This new possibility for Roth savings made me wonder: should I fund a Roth account or put money inside a traditional one? Disclosure: This article contains affiliate links, which generate income for this free website at no cost to you. Unlike a traditional 401(k), the Roth 401(k) account is funded with after-tax money (as opposed to pre-tax dollars). Traditional vs. Roth 401(k)/403(b) Analyzer. The Roth 401(k) allows you to contribute to your 401(k) account on an after-tax basis - and pay no taxes on qualifying distributions when the money is withdrawn. https://www.schwab.com/.../roth-vs-traditional-401-k-which-is-better Traditional 401(k) vs. Roth 401(k) walkthrough. Contributions to a Traditional 401(k) plan are made on a pre-tax basis, resulting in a lower tax bill and higher take home pay. A Traditional 401 (k) may be worth $43,027 more than a Roth 401 (k) ... 401k Calculator Excel Template; Further, again for simplicity’s sake, I’ll assume an inflation rate of 0% and no changes in income tax rates, standard deductions (with the exception of the more generous deduction for taxpayers 65 and up), personal exemptions, or the tax structure throughout the working and retirement years. Same aggregate* limit as Designated Roth 401(k) Account. Both can be good. Using this assumption, we’re eliminating the possibility of taxable investments. For this comparison, let’s see what happens to my investment totals when I maintain my Roth money inside the 401(k) and withdraw equal amounts out of the traditional 401(k) and Roth 401(k). Roth contributions are made with money that’s already been taxed, so you won’t have to pay taxes on qualified withdrawals, including earnings. Same as Designated Roth 401(k) Account and can have a qualified distribution for a first time home purchase. ), use of extra cash for debt payoff or personal spending, during working years, the retirement saver takes the standard deduction, gets a personal exemption, and contributes $10,000 annually to the 401(k) account, any taxes saved by funding a traditional 401(k) account are channeled into a Roth IRA, the retirement saver works and sets aside money for 30 years (from age 32 to 62), My income will be derived from two sources: Social Security and retirement account withdrawals, I’ll take 4% out of my 401(k) accounts in the first several years; when I turn 70.5, I’ll take RMDs according to the IRS table, The Roth IRA will cover my tax bill for as long as possible, My annual income from Social Security will be $12,000, I’ll spend 30 years in retirement, starting at age 62 and continuing until age 92 (I plan on living longer but for simplicity’s sake, I’m ending my calculations at 92), My investments will grow at a rate of 4% annually (I’ll invest more conservatively in retirement to preserve wealth). If you're under age 59½ and you have one Roth IRA that holds proceeds from multiple conversions, you're required to keep track of the 5-year holding period for each conversion separately. Distributions must begin no later than age 72 (age 70 ½ if reached age 70 ½ before January 1, 2020), unless still working and not a 5% owner. Enter your personal information to compare the results of traditional before-tax savings and Roth after-tax savings. Fill out the form for email updates from Investing to Thrive®. The College Fund – How Much to Save Spreadsheet, Guide to Comparing Health Insurance Plans with Spreadsheet, HDHP vs. Non-HDHP Cash Flow Comparison Spreadsheet, Social Security Retirement Benefits Spreadsheet, Simple, Stress-Free Investing for Life by Joseph Hogue, CFA. Work on developing the first plans began in 1979. The biggest difference between a traditional 401(k) and a Roth 401(k) is how the money you contribute is taxed. However, traditional IRAs have income limits if the account holder or their spouse are also covered by a workplace retirement plan, such as a 401(k). A company with an ad or a link may pay me whenever you take a certain action (such as sign up for an account) or make a purchase. There are pros and cons to the SIMPLE IRA vs. 401(k) decision for employers. Required fields are marked *. Roth 401(k) vs. A Roth 401(k) is an employer-sponsored retirement account that allows employees to contribute money for retirement. Roth 401K or Traditional 401K? The SIMPLE IRA is simpler; a 401(k) plan may be more flexible. Roth 401(k) vs. Next, I’ll figure my taxes each year. Understand the income requirements, tax benefits as well as contribution limits that can help with your retirement needs. Traditional 401k. Considering many points like above and for comparison purpose, we have created Traditional VS Roth IRA Calculator in Excel. Contribution limited to $6,000 plus an additional $1,000 for employees age 50 or over in 2019 and 2020. To compare Roth versus Traditional IRAs, we must account for the differences in tax payments. If you still don’t know who this ‘Roth’ guy is, or what he does, choosing between the two can be a matter of random guess. Different financial circumstances could change results. By Karen Doyle September 9, 2020 . Traditional 401(k) vs Roth 401(k) Some employers offer the less common Roth 401(k) plan, which combines features of both a traditional 401(k) and a Roth IRA (see below for more information on Roth IRAs). Understand the income requirements, tax benefits as well as contribution limits that can help with your retirement needs. Traditional 401K question. Roth IRAs also have a bit more flexibility in terms of early withdrawal. In this case, I’d have a higher net worth if I put money in a traditional 401(k) and applied savings to a Roth IRA instead of contributing to the Roth 401(k) only. Withdrawals from a traditional account are taxed at ordinary income rates while withdrawals from a Roth account are tax-free in retirement. Rather than wondering or guessing, I’ll look at the numbers for this situation. Preparing for retirement can be a challenge, especially because of the multiple ways that you can start saving. Traditional VS Roth IRA Calculator is a comparative study of Traditional as well as Roth IRAs. Then compare the IRA rules and tax benefits. An illustration of how money is drawn from the Roth IRA is contained in the fourth tab (Roth IRA | Retirement). Traditional IRA calculator . My personal contribution is about equal for both the Roth IRA and the traditional 401k . Roth accounts provide a tax advantage later. The calculations in this scenario show me that contributing to a traditional 401(k) could make more sense than putting money in a Roth 401(k) — if I applied tax savings wisely. The maximum contribution for 2019 is $19,000. The third tab in the spreadsheet (Income + Taxes | Retirement) projects taxable income and tax liability based on retirement account distributions and Social Security benefits. The chart below shows how much cash you’ll need to save for retirement and comparison on what’s better: Roth 401k vs Traditional. ROTH IRA. Different inputs could include: higher (or lower) income; higher (or lower) tax rates in retirement including high state income taxes; outside earnings in retirement from taxable investments, rental properties, and pension benefits; greater inflation; and higher (or lower returns) on my investments. If you are in low tax bracket today, then paying low tax today is wiser than paying higher tax on larger amount (contribution + growth) later. A growing number of employers are beginning to offer not only a Traditional 401K, but now a Roth 401K as well. Investing to Thrive’s Traditional 401(k) vs. Roth 401(k) Comparison, Income Taxes and Social Security Benefits, Social Security Benefits Worksheet for 1040, How to Spend Your 529 Plan If Your Child Does Not Go to College, Managed Portfolios: What They Are and Why You Should Know, Choices for Starting Social Security Benefits (Spreadsheet), Build a Portfolio with Vanguard Mutual Funds and Vanguard ETFs, Guide to Choosing Health Insurance (with Spreadsheet), Measuring Portfolio Performance vs. Roth Vs. Traditional 401k. The maximum employer contribution for a Roth 401K is also the same as the traditional – $58,000 in 2021 (combined with employee contribution) or 100% of the employee’s salary (whichever is less). How did you decide what to do? For this comparison, here are the main elements I’ll consider: Additional factors to consider (but not included in this illustration): To keep things simple, let’s say I live in a state without state income tax and never open a regular brokerage account. 401k vs Roth IRA Infographics Column headings are Description, Traditional IRA and Roth IRA. Traditional vs. Roth — or both? Choosing between a Roth vs. This analyzer is intended for use in making a rough comparison of Roth and traditional retirement plan accounts. Here’s a look at some of the traits they have in common with traditional 401(k)s: Similarities. Traditional IRA Calculator can help you decide. Benefit Comparison of Roth VS Traditional 401k. Contributions to a traditional 401(k) reduce taxable income whereas Roth contributions don’t reduce taxable income. These withdrawals will happen at the end of the year, giving my account balances time to grow throughout the year. Bankrate.com provides a FREE Roth vs. traditional IRA calculator and other 401(k) calculators to help consumers determine the best option for retirement savings. So, the net worth of the traditional saver (who also contributed to a Roth IRA) could grow to $1,382,055.18 at retirement whereas the Roth 401(k) saver would have a net worth of $1,132,832.11. the beginners guide to retirement 401 k ira, traditional ira vs roth ira the best choice for early, roth 401k and roth ira retirement plans conversion limits, where should i put my retirement money roth 401k vs roth, roth ira vs roth 401 k simplefinancialfreedom com roth Learning Center / Financial Calculators / Traditional 401k vs Roth 401k. Traditional 401(k) Roth 401(k) vs. Roth IRA ; Bottom Line ; sorbetto / Getty Images . : Traditional, pre-tax employee elective contributions are made with before-tax dollars. Results shown are hypothetical and are not intended to portray actual results. Traditional IRA depends on your income level and financial goals. Traditional vs. Roth 401(k) / 403(b) / 457(b) Calculator This tool compares the hypothetical results of investing in a Traditional (pre-tax) and a Roth (after-tax) retirement plan. Pre-Tax 401(k) Contributions. Some of the differences and similarities are outlined in the chart below. As of January 2006, there is a new type of 401(k) - the Roth 401(k). Roth vs. traditional IRAs: A comparison. I’ll analyze what happens to an investor’s overall net worth when 1) money is invested only within a Roth 401(k) and 2) money is invested in a Traditional 401(k) and tax savings from the traditional contribution are invested in a Roth IRA. This exercise helped me understand how personalized the discussion on funding a traditional 401(k) or Roth 401(k) should be. In the years prior to retirement, we’ll save on income taxes when we contribute to a traditional account. We’ll examine the comparison in the spreadsheet below. Of course it makes more sense to have a million dollars in a Roth account (which we can withdraw tax-free) vs. the same amount in a traditional account (on which we’ll pay taxes). How a Roth 401k Works vs. a Traditional 401k. How to Rollover a 401K; Inherited IRA Inherited IRA Account; Withdrawal Rules; Custodial IRA; Roth vs. Basically, most people should be maximizing HSA’s before Roth and Traditional IRA’s and 401k’s. Savings. The second tab in the spreadsheet (401(k)s | Retirement) indicates how the account value changes over time. Choosing between a Roth vs. Employer vs. individual accounts: Most 401(k)s are offered through employers, while anyone can open an IRA with any brokerage so people don't have to … There is a very lucrative type of retirement savings plan as all the future withdrawals are tax-free. You contribute after-tax dollars to a Roth 401(k). The investment balance continues to increase because annual investment growth exceeds taxes. I’m not good with abstract thinking. So I decided to run the numbers to see how net worth could be impacted by being taxed now vs. being taxed later. The fifth and final tab (Net Worth | Retirement) illustrates the changes in account balances during retirement. A Roth 401k is like a Roth IRA. It’s easy but too simplistic to look at this type of result and declare victory for the Roth. Money can continue to grow tax-free inside a Roth IRA. Use this calculator to help compare employee contributions to the new after-tax Roth 401(k) and the current tax-deductible 401(k). Terms of Use for Investing to Thrive®, published by Hall and Rowe Media, LLC, Privacy Policy for Investing to Thrive®, published by Hall and Rowe Media, LLC, Copyright © Hall and Rowe Media, LLC 2021  |  Designed & Developed with. My only source of income is from working and retirement accounts. 401k Vs 403b Comparison Chart Bedowntowndaytona … Whether you participate in a 401(k), 403(b) or 457(b) program, the information in this tool includes education to assist you in determining which option may be best for you based on your personal financial situation. Withdrawals of contributions and earnings. IRA eligibility. Roth vs Traditional 401(k) In a traditional 401(k), employees make pre-tax contributions. There are 3 main columns. If you still don’t know who this ‘Roth’ guy is, or what he does, choosing between the two can be a matter of random guess. An official website of the United States Government, 2021 - modified AGI married $208,000/single $140,000, 2020 - modified AGI married $206,000/single $139,000. 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