Roth vs. traditional

Traditional saves tax now and charges tax on withdrawal. Roth charges tax now and skips it later if the rules are met. On the same pre-tax dollars, the larger after-tax balance goes to whichever rate is lower. If the rates match, the outcomes match.

Arc · Published September 18, 2026 · Updated September 18, 2026

Roth contribution from the same pre-tax budget is contribution × (1 − current rate). It then grows and is withdrawn without a second tax in this simplified model. Equal rates cancel out.

Traditional after tax = future value × (1 − retirement rate)

When traditional tends to win the simple model

Your marginal rate is higher now than you expect in retirement. Large pre-tax balances can push the retirement rate back up, so “I will be in a lower bracket” is an assumption to test, not a fact.

When Roth tends to win the simple model

Your rate is low this year: a career start, a sabbatical, a business loss. Or you expect higher taxable income later, including required withdrawals and other pensions.

What the model leaves out

Income limits and deduction limits.
State taxes.
Required minimum distributions.
The option to convert in a low-income year.
Whether you can even save the pre-tax amount once the Roth tax is paid.

Common questions

Is the employer match Roth?

Matches have historically landed in a pre-tax balance even when you contribute Roth. Plans can differ. Read the plan document rather than assuming.

Sources

IRS, Roth comparison and traditional IRA deduction rules change with income and filing status.