Traditional vs. Roth 401(k) in the Last Years Before Retirement

Traditional 401(k) contributions are made before income tax and taxed when withdrawn. Roth 401(k) contributions are made after tax, and qualified withdrawals may be tax-free. Which fits better may depend on your current tax situation, your expected future tax situation, and how much you already hold in pre-tax accounts. This guide is educational, not a recommendation.

Published October 10, 2026. As of October 10, 2026, the IRS limit on employee elective deferrals to a 401(k) is $24,500 for 2026, and that limit applies to traditional and Roth contributions combined.[1] Most explainers on this topic are written for people early in their careers. This one is written for households five to ten years from retirement whose savings already sit mostly in pre-tax accounts, where the question can look different. Individual circumstances vary, and nothing here is tax advice or a recommendation to choose either account type.

How Each Type Is Taxed Going In and Coming Out

The two account types move the tax bill to different points in time.

Traditional (pre-tax) 401(k). Contributions are made with before-tax dollars, so they generally reduce taxable wages in the year you contribute.[3] Withdrawals are generally included in taxable income.[2]

Limitation: The deduction is not a permanent saving. The tax is deferred, and the amount owed later depends on the income and tax rules in effect when you withdraw.

Roth 401(k) (a designated Roth account). Contributions are included in your income in the year you make them. The IRS says qualified distributions, including earnings, are excluded from gross income.[3] A distribution is generally qualified when it is made after a five-taxable-year period of participation and on or after age 59 1/2, after death, or because of disability.[4]

Limitation: You give up the current-year reduction in taxable income. A withdrawal that is not qualified may include taxable earnings.[4] Whether future withdrawals are tax-free depends on the rules in force at that time, which can change.

Many plans let you split contributions between the two. The IRS describes the designated Roth feature as optional for a plan, so check whether yours offers it.[3]

How Existing Pre-Tax Balances Change the Question

For a younger saver with little in the plan, the choice mostly concerns how that year's contributions are taxed. When most of your savings are already pre-tax, there is a second layer: the balance you have already built will generally be taxed as ordinary income as it is withdrawn.

That can shift the questions you ask:

• Mix of account types. Adding Roth contributions may give a household a different mix of taxable and tax-free money to draw from in retirement. Limitation: Roth contributions in the last working years may be a small share of a large pre-tax balance, so the effect on the overall mix could be modest.
• Current versus expected bracket. Contributions in your highest-earning years may be deducted at a higher rate if you choose traditional, which is a reason some households keep contributing pre-tax. Limitation: Future income, such as withdrawals from a large pre-tax balance, could land in a similar or higher bracket, and no one can know future rates in advance.
• Cash flow today. A Roth contribution lowers take-home pay by more than a traditional contribution of the same size, because there is no reduction in current tax. Limitation: That difference is a real cost in the years you are still saving for retirement.

A separate tool, a Roth conversion, moves existing pre-tax money into a Roth account and is taxable in the year it happens. Our Roth conversion pros and cons guide covers that decision and its trade-offs. Contributions and conversions are different decisions and can be considered together.

Required Minimum Distributions and the Roth 401(k)

Required minimum distributions (RMDs) are one place the two account types can differ.

• Pre-tax 401(k) balances. The IRS applicable age for RMDs is 75 for people born on or after January 1, 1960, and 73 for those born from 1951 through 1958. Plan participants may be able to delay RMDs from their current employer's plan until they retire, unless they are a 5% owner.[5][6]
• Designated Roth accounts. Under SECURE 2.0, designated Roth accounts in employer plans are no longer subject to lifetime RMDs, effective for tax years beginning after December 31, 2023. Beneficiaries remain subject to RMD rules after the owner's death.[5][7]

Limitation: Not having RMDs on Roth money does not remove RMDs from the pre-tax accounts you keep. Required withdrawals from a large pre-tax balance may still raise taxable income in your seventies. Our RMD and Roth conversion explainer explains how required withdrawals and conversions interact, including the rule that an RMD itself cannot be converted.

Medicare Premiums and Income

Medicare Part B and Part D premiums can include an income-related surcharge. The Social Security Administration says it uses the tax return from two years earlier, so 2026 premiums are generally based on 2024 income, and the surcharge generally begins above $109,000 of modified adjusted gross income for a single filer or $218,000 for a married couple filing jointly.[8]

This matters for contribution choices in two ways:

• Withdrawals from pre-tax accounts count as income in the year taken, so they can contribute to a higher premium two years later.
• Qualified Roth withdrawals are not included in gross income, which may keep reported income lower in a year when you draw from them.[3]

Limitation: Premium brackets, thresholds and the look-back period are set by law and adjusted over time. Income that matters for premiums in your first Medicare years may reflect your final working years, so the timing of contributions and conversions is worth reviewing with your tax professional well before you enroll.

2026 Limits and Rules That Can Affect the Choice Near Retirement

• Deferral limit: $24,500 in 2026 across traditional and Roth contributions combined.[1]
• Catch-up contributions: If your plan allows them, participants age 50 or older can add up to $8,000 in 2026. Participants who turn 60, 61, 62 or 63 in a calendar year may be eligible for a higher limit of $11,250 for 2026, if the plan allows.[1][9]
• Roth-only catch-up for some higher earners: Beginning in 2026, participants in plans with Roth features must make catch-up contributions on a Roth basis if their prior-year wages with the plan sponsor exceeded $150,000 (for 2026).[9] If that applies to you, part of the choice may be set by the rules rather than by preference.
• Employer match: The IRS FAQ says matching contributions on designated Roth contributions have been allocated to a pre-tax account.[3] Since SECURE 2.0, a plan may allow employees to treat vested employer matching or nonelective contributions as Roth, but a plan is not required to offer that, and the amount is generally taxable in the year it is allocated.[10] Ask your plan administrator which applies.

Plan terms can be more restrictive than these IRS limits, so confirm what your plan permits.

Common Questions

Is it better to choose a traditional or Roth 401(k) close to retirement? There is no answer that fits every household. The comparison generally involves your tax situation now, your expected tax situation in retirement, and the size of your existing pre-tax balances. A tax professional can model your numbers.

Can I contribute to both a traditional and a Roth 401(k)? If your plan offers both, you can generally split your elective deferrals between them, but the combined total cannot exceed the annual limit.[1][3]

Do Roth 401(k) accounts have required minimum distributions? Not during the owner's lifetime for tax years beginning after December 31, 2023. Beneficiaries are subject to RMD rules.[5][7]

Is there an income limit for a Roth 401(k)? The IRS says there is no income limit to participate in a designated Roth 401(k), unlike the income limits that apply to Roth IRA contributions.[11] Separately, the Roth-only catch-up rule above can apply based on prior-year wages.

Are Roth 401(k) withdrawals always tax-free? No. Withdrawals are tax-free only when they are qualified. A nonqualified distribution may include taxable earnings.[4]

Does a Roth 401(k) have the same employer match as a traditional 401(k)? The match formula is set by your plan, and how the match is allocated and taxed depends on the plan. See the employer match note above.[3][10]

Questions to Bring to a Planning Conversation

• What share of my savings is pre-tax, and what could required withdrawals look like at the age that applies to me?
• How does my current tax bracket compare with what I might expect in the first years of retirement, and what could change that?
• Does my plan offer a Roth option, Roth catch-up contributions or a Roth employer match?
• Could my contribution choice, a conversion or both affect my income in the two years before I enroll in Medicare?
• How would the cash-flow difference of Roth contributions fit into my current budget?
• What should I confirm with my plan administrator and my tax professional before changing my elections?

Start With a Conversation

The firm's tax planning service looks at contributions, withdrawals and Medicare in one picture, and the who-i-help page describes the households it works with. You can also review how the firm charges for advice. If you would like to talk through your situation, start with a conversation. It is a 30-minute introductory call, and nothing in this article is a recommendation to choose a traditional or Roth account.

Sources

All sources accessed October 10, 2026.

1. IRS, Retirement topics: 401(k) and profit-sharing plan contribution limits, 2026 deferral and catch-up limits.
2. IRS, Retirement plan and IRA required minimum distributions FAQs, on withdrawals being included in taxable income except amounts already taxed or received tax-free.
3. IRS, Retirement plans FAQs on designated Roth accounts, page last reviewed August 2, 2026.
4. IRS, Retirement plans FAQs on designated Roth accounts, section "Distributions from designated Roth accounts" (qualified distributions and the 5-taxable-year period).
5. IRS, Retirement plan and IRA required minimum distributions FAQs, on Roth IRAs and designated Roth accounts and on delaying plan RMDs until retirement.
6. IRS, Internal Revenue Bulletin 2024-33, T.D. 10001 (final required minimum distribution regulations), applicable ages by birth year.
7. IRS, Internal Revenue Bulletin 2024-33, T.D. 10001, describing SECURE 2.0 section 325 (designated Roth accounts and lifetime RMDs).
8. Social Security Administration, Premiums: Rules for Higher-Income Beneficiaries, 2026 premium guidance.
9. IRS, Retirement topics: Catch-up contributions, 2026 catch-up limits and Roth catch-up requirement; see also IRS Notice 2025-67.
10. IRS, Internal Revenue Bulletin 2024-02, Notice 2024-2, Section L, on optional Roth treatment of employer matching and nonelective contributions under SECURE 2.0 section 604.
11. IRS, Roth comparison chart, used only for the statement that a designated Roth 401(k) has no income limit to participate. The dollar figures on that chart are for earlier years and are not relied on here.