Traditional 401(k) contributions can lower your taxable income today, while Roth contributions are taxed now in exchange for qualified tax-free withdrawals later. Compare today’s tax rate with the retirement income you already expect — SERPLUS, pension, RSU deliveries — before you choose, and revisit the mix every year.
Tax timing
Traditional saves tax now; Roth aims for tax-free later
Traditional 401(k) deferrals generally reduce your current taxable wages. Roth deferrals go in after tax and can produce qualified tax-free withdrawals later. Neither is better in the abstract — the choice comes down to your tax rates across time.
The right mix depends on three things: today’s rate, the income you expect in the future and how much you value holding accounts with different tax treatment. High income from salary, RSUs, bonuses or SERPLUS can make today’s deduction valuable; a future low-income window can make Roth conversions attractive even when current Roth contributions are not the fit.
That future window is the piece Intel employees most often miss — because Intel-specific income has a way of filling it.
| Dimension | Deduct nowTraditional | Tax-free laterRoth |
|---|---|---|
| Tax today | Generally reduces your current taxable wages | Deferrals go in after tax |
| Tax later | Large pre-tax balances can later produce big required withdrawals | Can produce qualified tax-free withdrawals |
| When it fits | High income from salary, RSUs, bonuses or SERPLUS can make today’s deduction valuable | Younger or temporarily low-income years — and diversification across tax types |
| The limit | Shares the one $24,500 deferral limit | Shares that same $24,500 limit |
Revisit the mix every year — the election is a yearly setting, not an identity.
Intel-specific inputs
Why your low-tax retirement years may already be spoken for
A lower salary in retirement does not guarantee low-tax years. Nearing retirement, you may still have pension income, SERPLUS installments or lump sums, RSU deliveries and large pre-tax balances that later produce big required withdrawals — scheduled income that can shrink the low-bracket space Roth conversions would otherwise use.
Earlier in a career the math often flips. If you are younger, or in a temporarily low-income year, current Roth contributions can look more attractive — and Roth money adds diversification across tax types if today’s rates are lower than the rates you expect later. The same household can reasonably change its election over time.
Before you set a percentage, check the inputs below — then make sure the dollars still fit inside the annual limit.
- Current federal and Arizona marginal rates
- Expected RSU and bonus income
- SERPLUS payout timing
- Pension or Social Security start dates
- Pre-tax 401(k) balance
- Planned retirement state
Contribution limits
One limit covers both kinds of deferral
IRS 2026 guidance says the employee elective-deferral limit for 401(k) plans increased to $24,500, with catch-up amounts for eligible employees — and traditional and Roth employee deferrals share that one limit.
Beginning in 2026 there is one more check for higher-paid employees who are catch-up eligible: review the Roth catch-up rule before you finalize the mix.
After-tax contributions used for mega backdoor Roth planning are a separate source with a separate plan review. Do not mix the labels — and do not let any of them go stale when life changes, which is the last piece.
Review cycle
The election is a yearly setting, not an identity
A layoff, promotion, sabbatical, relocation, marriage, large stock sale or a change to your expected retirement date can all move the math. Skip the permanent label — ‘Roth person,’ ‘traditional person’ — and set a fresh mix each year after projecting the current year and the first several retirement years.
An Intel-specialized advisor can weigh the 401(k) election against SERPLUS, equity and retirement-income planning before payroll windows close. The annual pass looks like this.
Your annual reset
Set this year’s mix, then book next year’s review
The goal is not a forever answer; it is a defensible mix for this year and a habit of rechecking. Project the current year, sketch the first several retirement years, and let the comparison — not a label — pick the split.
Use it as preparation, not as individualized advice — your current plan documents control which elections are available, and a tax professional should confirm the rate assumptions that drive the choice.
- Estimate your current federal and Arizona tax rate
- List future pension, SERPLUS and retirement-account income
- Identify possible lower-income years for Roth conversions
- Check the 2026 catch-up and Roth catch-up requirements if you are eligible
- Choose a contribution mix and put the annual review on the calendar
Frequently asked questions
Questions employees ask next
Can Intel employees split contributions between Roth and traditional 401(k)?
Plan procedures control the election mechanics, but many 401(k) plans allow a mix. Confirm the current participant rules before you count on splitting.
Are Roth 401(k) contributions better for high earners?
Not automatically. A high current tax rate can make traditional deferrals valuable, while Roth can add future tax diversification — run the comparison for your own years.
Is mega backdoor Roth the same as Roth 401(k)?
No. Mega backdoor Roth generally involves after-tax contributions plus a conversion or rollover process — different mechanics from electing Roth deferrals.
Primary sources
What this guide is based on
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