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A Kiplinger report argues that workers may want to compare Roth 401(k) contributions with traditional pretax contributions, citing potential tax-free qualified withdrawals and growth. Its examples are hypothetical, and the better choice depends on individual tax rates, investment returns, plan rules and how contributions are funded.
A Kiplinger report is urging workers to compare Roth 401(k) contributions with pretax contributions, arguing that paying income tax upfront may be worthwhile for people who expect to benefit from tax-free qualified withdrawals later. The article draws on the author’s retirement experience and hypothetical calculations; it does not establish that a Roth account is the better choice for every saver.
The report says 95% of employers offer a Roth 401(k), while fewer than 20% of employees use one. It also cites Fidelity data showing Roth conversions rose 41% year over year as of the first quarter of 2026. The report presents that increase as evidence of interest in tax-free growth, but conversion activity does not by itself show why people converted or which contribution option is best for other workers.
One example assumes a worker earns $100,000, contributes 6% of pay for 40 years, receives a 4% employer match, earns a steady 5% annual return and retires in Florida. Under those assumptions, the report estimates $1,192,295 in after-tax retirement assets for the Roth scenario and $1,078,139 for pretax contributions, a modeled difference of $114,156. It assumes a 22% federal tax rate while working and a 15% rate on retirement withdrawals.
With a 7% return instead of 5%, the report’s example estimates a $192,249 difference in after-tax assets. These are projections, not observed outcomes or guarantees. The report says its calculation excludes investment fees and assumes the same contribution amount in each scenario; because Roth contributions reduce take-home pay more, investing the tax savings from pretax contributions could narrow the modeled gap.
How Tax Timing Changes Retirement Income
The decision affects when taxes are paid and which portion of retirement savings is subject to income tax. Roth contributions are made with after-tax income, while qualified withdrawals of contributions and earnings generally are tax-free under applicable rules. Pretax contributions reduce taxable income today, but withdrawals are generally taxed as income. A worker’s future tax bracket, state taxes, investment performance and withdrawal needs can all affect the result.
The report’s central point is that taxes can apply not only to the original pretax contribution but also to its investment growth. That can make tax treatment consequential over a long saving period. But the comparison depends on assumptions, including whether the saver pays the Roth tax from other funds or invests the amount saved through pretax contributions. The example is illustrative rather than personalized financial guidance.
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Roth Options Reached Plans Gradually
The report notes that Roth 401(k) plans became available in 2006, and some workers—particularly older employees—may not have had access to one during much of their careers. The author, a former retirement-industry consultant, says the option arrived in their plan during their highest-earning years and that, nearly five years into retirement, they regret not giving it more consideration.
That account is personal experience, not evidence that other retirees will reach the same conclusion. The report says many workers have continued choosing pretax contributions on the assumption that their tax rate will be lower in retirement. Whether that assumption holds varies by person. It also notes that employer matching contributions generally remain pretax in the example, reflecting the report’s statement that only about one in five plans offers a Roth match.
““Almost five years into retirement, it’s one of my biggest regrets.””
— Kiplinger report author
The Right Choice Depends on Personal Taxes
The report does not establish which option will leave a particular worker with more after-tax savings. Future tax rates, state of residence, earnings, plan fees, investment returns and withdrawal patterns are uncertain. Its examples assume fixed tax rates and returns, a constant salary and a specific retirement location, conditions that may differ from a reader’s experience.
The source material does not identify the full set of seven reasons in detail, so this article focuses on the reported arguments and calculations rather than supplying additional reasons as though they came from the report. The cited Fidelity conversion increase also does not establish that conversions were caused by Roth 401(k) choices or indicate their results.
Compare Plan Rules and Tax Scenarios
Workers considering a change can check whether their employer plan offers Roth contributions, what matching rules apply and whether a Roth match is available. The report advises running personal calculations with a tax accountant or financial adviser. A useful comparison should account for current and possible future tax rates, state taxes, contribution amounts and what would happen to any take-home pay saved by choosing pretax contributions.
No future performance or tax outcome is confirmed by the examples. The practical next step is an individual review of plan terms and assumptions before changing contribution elections.
Key Questions
What is the main difference between Roth and pretax 401(k) contributions?
Roth contributions are taxed before they enter the account; qualified withdrawals are generally tax-free. Pretax contributions generally reduce taxable income in the contribution year, while withdrawals are generally taxed as income.
Does the report prove a Roth 401(k) will produce more retirement money?
No. Its dollar comparisons are hypothetical estimates based on fixed assumptions about returns, tax rates, salary, contributions and retirement location. Actual results can differ.
What assumptions drive the report’s $114,156 estimate?
The example assumes a $100,000 salary, a 6% employee contribution, a 4% employer match, 40 years of saving, a 5% annual return, a 22% working-year federal tax rate and a 15% retirement withdrawal tax rate. It also assumes retirement in Florida and does not include investment fees.
Are employer matching contributions Roth contributions?
Not necessarily. The report’s calculations treat the employer match as pretax in both scenarios. Matching arrangements vary by plan, so workers should check their plan’s specific rules.
Source: kiplinger.com
