Which option is best for you?

If your 401(k) or 403(b) retirement plan accepts both traditional and Roth contributions, you have two ways to save for your retirement. Both offer federal income tax advantages.

Traditional accounts provide a tax break now. Traditional 401(k)/403(b) contributions are not taxed at the time of investment. Instead, taxes are paid on withdrawals, including any earnings. Getting a tax break at the time of investment will leave more money in your pocket now — money that you can invest, save or spend.

Roth accounts provide a tax advantage later. Roth 401(k)/403(b) contributions are made with money that’s already been taxed, so you won’t have to pay taxes on qualified withdrawals, including earnings.

Enter your personal information to compare the results of traditional before-tax savings and Roth after-tax savings. Click on each question for help and additional information.

Contribution limits

The annual IRS contribution limit is $20,500 for 2022 ($27,000 for investors 50 and older).

Withdrawing money soon? Go traditional

Roth accounts must be at least five years old before tax-free withdrawals can be taken. Traditional accounts don’t have a holding requirement.

Federal tax bracket

Not sure what your tax bracket is? Click here for a table.

Life expectancy

You may need your retirement savings to last 20 years or more. Look at a life expectancy table.

Enter “1” for a lump-sum distribution.

If you entered “1” for the previous question, your entire account is withdrawn when you retire, so a return in retirement is not applicable.

Future taxes: the key factor

Are you expecting to be in a lower tax bracket in retirement? Or do you think tax rates overall will be higher?

You can use current tax brackets as a guide, but they may change in the future. Consider how much you’ll withdraw each year when you estimate your tax rate in retirement.


Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional or downloaded and should be read carefully before investing.