401(k), Roth IRA, and Taxable Accounts: How They Fit Together
Educational explainer, not financial or tax advice — the mechanics of how the three main account types are taxed, and a walkthrough for projecting them together with this site's calculators. Statutory ages and rules below are current as of September 2026 and change over time; irs.gov and ssa.gov publish the current figures.
Most retirement savers do not have one account; they have a 401(k) at work, an IRA on the side, and sometimes a plain brokerage account on top. The growth arithmetic in all three is the same compounding — a dollar does not grow faster because of the label on the account. What differs is when the tax happens: before the contribution, during the growth, or at withdrawal. This guide lays out those mechanics, what changes at withdrawal time for each account, and then walks through combining this site's separate calculators into one multi-account projection.
Three accounts, three tax timings
The account types differ on exactly one axis — where in the timeline the tax lands. The mechanics, per irs.gov:
| Account | Money going in | While invested | Money coming out |
|---|---|---|---|
| Traditional 401(k) / IRA | Generally pre-tax contributions | No tax on growth | Withdrawals taxed as ordinary income |
| Roth 401(k) / Roth IRA | After-tax contributions | No tax on growth | Qualified withdrawals tax-free |
| Taxable brokerage | After-tax; no contribution limits | Dividends and realized gains taxed in the year received | Selling realizes gains, taxed that year |
The tax-advantaged accounts cap how much can go in each year; the IRS adjusts those limits annually, so this page quotes none — the current figures live at irs.gov. The taxable brokerage account has no cap, which is why it commonly appears in a plan once the tax-advantaged space is used: it is the account of unlimited size that pays its tax as it goes.
What changes at withdrawal time
At contribution time the accounts differ by one paycheck line. At withdrawal time they diverge sharply, and three statutory rules do most of the work:
Age 59½. Distributions from most tax-advantaged retirement accounts before this age generally face a 10% additional federal tax on top of ordinary income tax. The tax code lists exceptions; irs.gov documents them. The taxable brokerage account has no such age — its dollars were never tax-deferred, so nothing unwinds at withdrawal beyond capital-gains tax on the growth being sold.
Ordinary income vs. tax-free. Every traditional-account dollar withdrawn is ordinary income in that year; every qualified Roth dollar is not. Two savers with identical statement balances can therefore have different amounts of spendable money — the traditional balance carries an embedded future tax bill, the Roth balance does not.
Age 73. Required minimum distributions from traditional accounts currently begin at 73 under the SECURE 2.0 Act, scheduled to rise to 75 starting in 2033. The annual amount is the prior December 31 balance divided by the IRS life-expectancy factor for your age — the RMD Calculator computes it from the Uniform Lifetime Table. Roth IRAs have no lifetime RMDs for the original owner, and since 2024 Roth 401(k) accounts are also exempt. The full age sequence — 59½, Social Security claiming ages, Medicare at 65, RMDs — is laid out in Retirement Age Milestones.
Projecting all three with this site's calculators
Each calculator on this site models one account well; a multi-account picture comes from running them with a shared set of assumptions — the same annual return and the same number of years in every tool, so the pieces add cleanly. The walkthrough, with a worked example computed at build time by the same tested engine that powers the calculators (25 years at an assumed 7% return throughout):
- The workplace plan. The 401(k) Calculator takes salary, a contribution percentage, and the employer-match formula, because the match is arithmetic the other tools do not model: at "50% up to 6% of pay," the employer adds fifty cents per contributed dollar up to the cap. Example: an $80,000 salary contributing 6% with that match grows to about $486,043 — $120,000 contributed, $60,000 of employer match, $306,043 of growth.
- The Roth side. The Roth IRA Calculator projects a flat monthly contribution. Example: $250 a month grows to about $202,518, of which $127,518 is growth — the slice that qualified Roth withdrawals take out tax-free.
- The taxable account. The Investment Calculator handles the brokerage leg, since it accepts any starting balance and contribution without retirement-account framing. Example: $200 a month grows to about $162,014 before the taxes this account pays along the way.
- The combined picture. Because the compounding is identical, the sums can be entered into the Retirement Calculator as one combined balance and one combined monthly contribution — in the example, roughly $850,575 of projected savings — which that tool then converts into an inflation-adjusted drawdown picture.
A rough mental check on any of these projections: the Rule of 72, an approximation, divides 72 by the annual growth rate to estimate years to double — 72 ÷ 6 = 12 years at 6%. If a calculator result looks surprising, that estimate usually shows whether the surprise is the time horizon or a typo.
From a combined balance to an income number
The combined balance is a pre-tax planning figure: the traditional slice will be taxed as ordinary income when withdrawn, the Roth slice will not, and the taxable slice has been paying tax all along. The Retirement Withdrawal Calculator turns a balance into a sustainable-spending picture, and the most cited benchmark for that conversion is the 4% rule — a heuristic from William Bengen's 1994 study, reinforced by the 1998 "Trinity study," under which a first-year withdrawal of 4% of the starting portfolio, adjusted for inflation annually, historically survived every rolling 30-year U.S. period in the data studied. It is research on one stock/bond mix and one horizon, not a guarantee; The 4% Rule guide covers where it comes from and where it strains.
Frequently asked questions
Why model a 401(k), a Roth IRA, and a brokerage account separately?
Because the growth arithmetic is identical but the tax treatment is not. A traditional 401(k) dollar is taxed as ordinary income on the way out, a qualified Roth dollar is not taxed on the way out, and a brokerage account is taxed along the way as dividends and gains are realized. Three balances that look equal on a statement are not equal after withdrawal, so this site keeps a dedicated calculator for each account type.
Can the balances be added into one number for a combined projection?
For the growth math, yes: compounding does not care which account a dollar sits in, so the sum of current balances and the sum of monthly contributions can go into the Retirement Calculator as a single combined projection, using the same return assumption and time horizon for every account. The combined figure is a pre-tax planning number — the after-tax value of each slice still depends on its account type.
When is a Roth account taxed?
Roth contributions are made with after-tax money, and qualified withdrawals are tax-free — that is the trade against a traditional account, which generally takes pre-tax contributions and taxes withdrawals as ordinary income. Distributions from most tax-advantaged accounts before age 59½ generally face a 10% additional federal tax on top of any ordinary income tax; the tax code lists exceptions, which irs.gov documents.
What are the contribution limits for a 401(k) and a Roth IRA?
The IRS adjusts the limits annually, which is why the calculators on this site do not hard-code them and this page quotes none. The current figures for 401(k) elective deferrals and IRA contributions are published at irs.gov. A taxable brokerage account has no contribution limit, which is the structural reason multi-account savers often hold one alongside the tax-advantaged accounts.
Do all three accounts have required minimum distributions?
No. Under the SECURE 2.0 Act, required minimum distributions currently begin at age 73 (scheduled to rise to 75 starting in 2033) for traditional accounts. Roth IRAs have no lifetime RMDs for the original owner, and since 2024 Roth 401(k) accounts are also exempt. Taxable brokerage accounts have no RMDs at all — they were taxed along the way instead.
Not financial advice: an educational explainer of account mechanics. The worked examples assume a constant return and exclude contribution limits, taxes, and market volatility; they are computed at build time by the same tested engine as the calculators, so this page cannot drift from the tools. Statutory ages and rules are current as of September 2026 — confirm current figures at irs.gov and ssa.gov, and consult a licensed professional for your situation. See the methodology page.