A worked example

Traditional or Roth, and the match you shouldn’t leave

Priya, 32, single, earning $220,000. Her employer matches 50 cents on the dollar up to 6% of pay, and her plan document happens to allow after-tax contributions and in-plan conversions — which most do not.

“Should I be doing traditional or Roth in my 401(k)? And what is this mega backdoor everybody mentions?”

What the projection shows

That the three questions have very different sizes. The match is the settled one — funding the plan at all leaves her $304,612 better off after tax than skipping it, which is why “defer at least up to the match” is the one thing every thread agrees on. And the half-measure is on the page now rather than implied: deferring $6,600 takes $3,300 of the $6,600 her employer would have paid — every year, unpaid rather than deferred — and finishes at $8,697,114 of after-tax wealth against $8,845,686 for maxing the traditional deferral. Nothing on a payslip, a statement or a return records the half that was never claimed. Traditional against Roth is a genuine bet rather than a rule: all-traditional pays $1,090,587 of lifetime tax against $1,273,652 for all-Roth, so on her facts — 32% now, lower brackets in retirement — the deduction wins, and the 80/20 split lands between them at $1,122,374. Reverse the bracket assumption and the answer reverses with it, which is the argument for splitting rather than picking a side. The mega backdoor is the largest lever and the least understood: it fills the whole gap between the deferral ceiling and the §415(c) limit with already-taxed money, converted at no tax cost. It pays the lowest lifetime tax of the four by a wide margin — $1,002,437 — and finishes level with all-Roth on wealth after tax, $9,112,048 against $9,115,552, which is a rounding error on nine million and not a ranking. Both beat all-traditional's $8,845,686. The reason is only that a dollar is better sheltered in a Roth than in a brokerage account earning the same return, which is why the two Roth-heavy routes converge once the tax still owed on the traditional balance is priced properly. What it needs is cash: her income has to comfortably exceed her spending every year she does it, and this projection assumes her salary keeps pace with inflation. Flat wages against an indexing contribution ceiling turn it into a strategy she cannot fund.