Both account types grow the same gross dollar amount given equal contributions and identical return rates. The entire difference comes from when you pay taxes. Use the Roth IRA Contribution Calculator if you also want to compare IRA eligibility alongside your 401k.
| Current Rate | Retirement Rate | Better Choice | Reason |
|---|---|---|---|
| 12% | 22% | Roth | Pay 12% now, avoid 22% later |
| 22% | 22% | Tie | Equal tax burden either way |
| 24% | 15% | Traditional | Defer tax to 15% instead of 24% now |
| 32% | 22% | Traditional | Save 32% deduction, pay 22% later |
| 22% | 32% | Roth | Lock in 22%, avoid 32% in retirement |
This calculator compares equal nominal dollar contributions. Traditional also saves current taxes; if those savings are reinvested separately, the break-even shifts. The table above uses equal-cost logic (conventional financial planning guidance).
The Thrift Savings Plan works like a federal government 401k. Federal employees choose between Roth TSP (after-tax contributions, tax-free withdrawals) and traditional TSP (pre-tax contributions, taxed at withdrawal). The same calculator above applies. See the FERS Supplement Calculator to estimate the Special Retirement Supplement that bridges TSP withdrawals before Social Security begins.
| Feature | Roth TSP | Traditional TSP |
|---|---|---|
| Tax on contributions | After-tax | Pre-tax |
| Tax on withdrawals | Tax-free | Ordinary income |
| 2025 employee limit | $23,500 | $23,500 |
| Catch-up (50+) | $7,500 | $7,500 |
| Agency match goes to | Traditional only | Traditional only |
| Income limit | None | None |
| RMDs required (2024+) | No (SECURE 2.0) | Yes, age 73 |
FERS employees receive up to 5% of salary in agency matching contributions. This match always goes into the traditional TSP and is taxed at withdrawal, regardless of your own contribution type. When deciding Roth vs traditional TSP, factor in your expected pension income, which raises your retirement tax rate and may favor Roth.
A 403b plan covers employees at nonprofits, hospitals, public schools, and universities. The Roth vs traditional tax logic is identical to a 401k. The 2025 contribution limits are the same: $23,500 per year ($31,000 if age 50 or older). The key difference is a special 15-year catch-up available to long-tenured 501(c)(3) employees.
| Parameter | 403b | 401k |
|---|---|---|
| 2025 employee limit | $23,500 | $23,500 |
| Catch-up (age 50+) | $7,500 | $7,500 |
| 15-year service catch-up | Up to $3,000/yr ($15k lifetime) | Not available |
| Roth option available | Plan-dependent | Plan-dependent |
| Typical employer type | Nonprofit, school, hospital | Private company |
| Investment options | Often annuity-heavy | Mutual fund variety |
The 15-year catch-up applies only if you have 15 or more years of service at the same 501(c)(3) and your average annual contributions were below $5,000. The $3,000/year extra is capped at a $15,000 lifetime maximum. It can be layered on top of the standard age-50 catch-up contribution.
Jordan is 32 years old, earning $80,000, contributing 10% ($8,000/year) to a 401k. Current marginal rate is 15%. Expected retirement rate is 22% (pension + Social Security push the rate up). Assumed return is 7% over 30 years. See the 401k Calculator with Match to add employer matching contributions to the projection.
Jordan expects a pension and Social Security that push the retirement bracket to 22%, higher than the current 15%. Roth locks in the 15% rate now. The traditional saves $1,200/year in current taxes but loses $179,000 in after-tax retirement wealth at the higher withdrawal rate.