A traditional 401(k) contribution comes out of your paycheck before income tax, so your take-home pay drops by less than you contribute. A Roth 401(k) contribution comes out after income tax, so your take-home pay drops by the full amount, but qualified withdrawals in retirement are tax-free.
That's the core of the Roth vs traditional 401k choice on a paycheck: pay the income tax now or pay it later. Below is what each option looks like on a real pay stub, with 2026 numbers.
How each type is taxed
| Item | Traditional 401(k) | Roth 401(k) |
|---|---|---|
| Federal income tax on contribution | Not withheld now | Withheld now |
| State income tax on contribution | Not withheld in most states | Withheld now |
| Social Security and Medicare | Withheld | Withheld |
| Investment growth | Tax-deferred | Tax-free if withdrawal is qualified |
| Withdrawals in retirement | Taxed as ordinary income | Tax-free if qualified |
| 2026 employee limit | $24,500, shared with Roth | $24,500, shared with traditional |
Both types share one annual limit. You can't put $24,500 in traditional and another $24,500 in Roth in the same year. Our page on 401(k) contribution limits for 2026 has the details.
A Roth withdrawal is generally qualified when you're at least 59½ and the account has been open for at least five years. Withdrawals that don't meet the rules can be partly taxable.
Roth vs traditional 401k on a real paycheck
Here's a single filer in Michigan earning $85,000 a year, paid biweekly. Gross pay is $3,269.23 per paycheck. We compared an 8% traditional contribution ($261.54) with the same $261.54 going into a Roth, using the PaycheckHubs paycheck calculator. These are 2026 estimates with no other deductions and no city income tax.
| Per paycheck | No 401(k) | 8% traditional | 8% Roth |
|---|---|---|---|
| Retirement contribution | $0.00 | $261.54 | $261.54 |
| Federal income tax | $379.62 | $322.08 | $379.62 |
| Michigan income tax | $129.30 | $118.18 | $129.30 |
| Social Security | $202.69 | $202.69 | $202.69 |
| Medicare | $47.40 | $47.40 | $47.40 |
| Take-home pay | $2,510.22 | $2,317.34 | $2,248.68 |
With the Roth, the tax lines are identical to having no 401(k) at all, and the full $261.54 comes out of take-home pay. With the traditional option, federal and Michigan withholding drop, so take-home pay is $68.66 higher per paycheck.
Over 26 paychecks, the traditional option leaves this worker with about $1,785 more take-home pay for the year. The Roth worker isn't losing that money: it's income tax paid now instead of in retirement.
How to think about the trade-off
Your tax rate now vs later
The traditional option tends to come out ahead if your tax rate in retirement will be lower than it is today. The Roth tends to come out ahead if your rate will be the same or higher. Nobody knows future tax law or their exact retirement income, so this is an estimate either way.
Workers early in their careers, or in the 10% or 12% federal brackets, often have less to gain from the traditional deduction today. Workers in higher brackets get a bigger immediate tax break from traditional contributions. Our guide to marginal vs effective tax rates explains which rate matters here: your marginal rate.
Your monthly budget
For the same contribution, a Roth costs more per paycheck. If the higher take-home pay from a traditional contribution is what lets you contribute at all, or contribute enough to get your full employer match, that matters. Some people split contributions between both types to spread out the tax treatment.
Your state
State tax affects the math too. In a state with no wage tax, like Florida or Texas, traditional contributions only save federal income tax today. In Pennsylvania, traditional 401(k) contributions are already subject to state income tax, so the state treats both types the same way on your paycheck. If you might move to a different state in retirement, that can change which option looks better.
How the employer match fits in
Your employer's matching contributions have traditionally gone into the pre-tax side of the account, even when you contribute to a Roth. That means you'd pay income tax on the match and its growth when you withdraw it. Some plans now let employers make matching contributions as Roth, which are taxable to you in the year they're made. Your plan documents will say which applies. For more, see how a 401(k) employer match works.
Changing your election
Most plans let you change between Roth and traditional, or change the split, during the year. The change applies to future paychecks only. Money already contributed stays in the type it went in as, unless your plan offers an in-plan Roth conversion, which is a taxable event.
Before you change anything, run both versions through the take-home pay calculator so you know what your next paycheck will look like. For anything that depends on your full tax picture, a tax professional can help.
Frequently Asked Questions
Does a Roth 401(k) reduce my taxable income?
No. Roth contributions are made with after-tax pay, so they don't lower the wages used for income tax withholding. The tax benefit comes later, on qualified withdrawals.
Do Roth and traditional 401(k) contributions both pay Social Security tax?
Yes. Social Security and Medicare are withheld on your full gross pay either way. Only income tax withholding differs.
Can I contribute to both a Roth and a traditional 401(k)?
If your plan offers both, you can usually split your contribution between them. The combined total must stay within the $24,500 limit for 2026, plus any catch-up you qualify for.
Why is my paycheck smaller after switching to Roth?
Because income tax is now withheld on the money going into your 401(k). In the Michigan example, switching an 8% contribution from traditional to Roth lowered take-home pay by $68.66 per paycheck.
Sources
- IRS: 401(k) limit increases to $24,500 for 2026
- IRS Publication 15, Employer's Tax Guide
- IRS Revenue Procedure 2025-32
- Tax Foundation: State Income Tax Rates for 2026
Run the numbers for your state
Written and checked against IRS, Social Security Administration and state tax agency publications for the 2026 tax year. General information, not tax, legal or financial advice. Read our editorial policy, calculation methodology and sources.