US pay guide

How a 401(k) affects take-home pay

A 401(k) contribution reduces the cash paid to you today, but traditional and Roth contributions can affect a payslip differently.

In short

Traditional 401(k) contributions are generally made before federal income tax; Roth 401(k) contributions are made after federal income tax. Both still reduce cash take-home pay.

Traditional 401(k)

Traditional contributions normally reduce federal taxable wages, so the reduction in take-home pay is often smaller than the contribution itself.

Roth 401(k)

Roth contributions are generally taxed before they enter the account, so the contribution normally reduces take-home pay pound-for-dollar.

Employer match

An employer match is valuable compensation but is usually not cash paid into your bank account. Compare it separately when reviewing an offer.

Compare a US job offer alongside benefits and retirement contributions. Check your plan documents for its exact treatment.