Roth or traditional 401(k) if you might leave the US: the 29% line

If you might take your 401(k) out after you have left the United States, the Roth versus traditional question reduces to one comparison: the tax you save today on a traditional contribution against the tax a traditional payout will face later as a nonresident. A qualified Roth payout is excluded from US gross income, so the US takes nothing from it wherever you live; a traditional payout to a nonresident alien is withheld at 30% by default, and the final bill can be lower after a treaty or a Form 1040-NR, or higher once the country you move to taxes it. For a saver in the 24% federal bracket with 5% state tax, putting $10,000 a year of pre-tax pay into a 401(k) from 35 to 60 at 7%, the two tie if the traditional payout is taxed at 29%. At the 30% default the Roth keeps $449,068 against $442,743, ahead by $6,325, though a Form 1040-NR estimate of 27.1% on the same payout would put the traditional account $12,219 ahead; at a 15% payout tax the traditional account is $88,549 ahead.

The numbers

Every figure except the Form 1040-NR estimate comes from the MoneyVibe Roth or traditional if you might leave the US calculator, with these inputs: $10,000 of pre-tax pay a year for 25 years, from age 35 to a single payout at 60; a steady 7% return before tax, contributions at the end of each year; 24% federal plus 5% state tax today, 29% combined, assuming the state also excludes 401(k) deferrals from pay as the federal rules do; 30% tax on the traditional payout; no tax on a qualified Roth payout. Both routes cost the same out of pocket, $7,100 a year: the traditional account receives the full $10,000 and the $2,900 of tax saved stays in your pay, while the Roth receives the $7,100 left after tax. Results are rounded to the dollar and are not forecasts.

The 27.1% row comes from the 401(k) withdrawal when leaving the US calculator and is 27.07% before rounding; typing a rounded 27.1% into the Roth calculator shows $461,085 and a $12,017 lead. The Roth column does not move because a qualified Roth payout is not taxed by the US; the traditional column falls with each point of payout tax. The walk from contribution to payout shows why the gap at 30% is so small.

Each year's deposit is multiplied by the same factor, 63.249, so the traditional balance is exactly 1 ÷ (1 − 0.29) times the Roth balance, and taxing it at 29% brings the two back to the same number. The tie sits at your combined rate today; every point of payout tax above it favors the Roth.

Why it works this way

A traditional payout to a nonresident is withheld at 30% by default. Section 1441(a) requires anyone paying US-source income to a nonresident alien individual to "deduct and withhold from such items a tax equal to 30 percent thereof", and section 871(a) imposes a 30% tax on the amount a nonresident alien receives from US sources as fixed or determinable income, which the Instructions for Form W-8BEN list as including annuities and compensation for services. Publication 519 (2025), chapter 8, applies it to retirement money directly: "If you receive a pension distribution from the United States, the payment is generally subject to the 30% (or lower treaty) rate of withholding."

Withholding is not always the final tax. Publication 519, chapter 4, says pension or retirement distributions attributable to services performed in the US after 1986 "are effectively connected income to the extent attributable to contributions", and the same chapter explains that effectively connected income "is taxed at graduated rates" while income that is not "is taxed at a flat 30% (or lower treaty) rate". So on a Form 1040-NR the part of a traditional balance that came from contributions is taxed at the regular brackets (with no standard deduction, which Publication 519 says "[n]onresident aliens cannot claim", apart from a narrow treaty exception for certain students and business apprentices), the earnings part at the flat rate, and the tax withheld is credited against the result. For this example's single $632,490 payout with no other US income that year, the estimate at 2026 brackets is $56,456 on the $250,000 of contributions plus $114,747 at 30% on the $382,490 of earnings: $171,203, or 27.1%. That keeps $461,287, which is $12,219 more than the Roth, and $18,544 of the $189,747 withheld comes back on filing. Taking the money over several years instead of in one payout would spread the contribution part across lower brackets and cut this estimate, though not the flat 30% on earnings. Tax in your new country can push the total back above 29%, and the brackets when you are 60 will not be 2026's. A treaty can lower the rate, claimed by giving the plan a Form W-8BEN before the payment; the same chapter 8 passage lets you ask, on Form W-8BEN or 8233, for graduated-rate withholding on the part that arises from US services after 1986; and the country you live in may tax the payout as well. That spread is why the calculator takes the total rate you expect as an input and shows every rate from 0% up. The 401(k) withdrawal when leaving the US calculator estimates the Form 1040-NR side for a specific balance, and the post on what a cash-out, a rollover or leaving the account costs and the chapter on leaving with a 401(k) walk through it.

A qualified Roth payout is outside the 30% entirely. Section 402A(d)(1) says "[a]ny qualified distribution from a designated Roth account shall not be includible in gross income", and section 1441 withholds only to the extent an item "constitutes gross income from sources within the United States". The IRS designated Roth account page defines a qualified distribution as one "made at least five years after the year of the participant's first designated Roth contribution (counting the first year as part of the five)" and on or after age 59½ (or on disability or death). Publication 590-B adds that designated Roth accounts "aren't IRAs and shouldn't be confused with Roth IRAs"; a Roth IRA has its own five-year clock. None of this stops another country from taxing the payout under its own law, a second lever (after a low traditional payout tax) that can turn a Roth from a win into a loss.

Before 59½ the 10% additional tax hits both, but differently. Section 72(t) increases the tax on an early distribution "by an amount equal to 10 percent of the portion of such amount which is includible in gross income", and Topic 558 confirms the rule applies to 401(k) plans. For a traditional account the whole payout is includible, so the 10% stacks on top of the 30%. For a Roth that is not yet qualified, only the earnings are includible, so the contributions come back without US tax and the earnings carry both the payout rate and the 10%. Exceptions exist, including separating from service in or after the year you reach 55 (see the early withdrawal penalty glossary page), and the calculator does not model them.

The contribution limit is shared. Notice 2025-67 sets the 2026 limit on elective deferrals at $24,500, and the IRS designated Roth page states that pre-tax deferrals and designated Roth contributions count against one combined limit; the calculator does not check it. If you contribute the maximum either way, the two routes stop costing the same: a maximum Roth contribution uses more of your pay, and a fair comparison then has to include the taxable account where the traditional saver would invest the difference, which this calculator does not model. The example's 24% bracket runs from $105,700 to $201,775 of taxable income for a single filer in 2026 under Revenue Procedure 2025-32, and from $109,125 to $208,325 in 2027 under Revenue Procedure 2026-35.

What changes the answer

• Whether you become a nonresident at all. The 30% rule covers nonresident aliens. A US citizen living abroad is still taxed as a citizen, and a green card holder stays a US tax resident until the status is taken away or found abandoned, unless a treaty tiebreaker rule treats them as a resident of the other country, a claim Publication 519 says can trigger the expatriation tax; short of those steps this table does not apply to either. Publication 519 also warns that former citizens and residents may fall outside these rules, so check the expatriation tax before giving up citizenship or a long-held green card; years of residency on a visa under the substantial presence test are a different thing.
• Your combined rate today. It sets the tie. With no state tax, 24% federal alone, the Roth keeps $480,693 and leads by $37,949 at a 30% payout tax; in the 22% bracket with no state tax it leads by $50,599. At 32% federal plus 5% state, 37% combined, the Roth puts in only $6,300 a year, keeps $398,469, and trails by $44,274, with the tie moving to 37%.
• A lower payout tax after a treaty or a Form 1040-NR. At 15% on the traditional payout, the traditional account keeps $537,617 and leads by $88,549. Treaty rates on pensions differ by country, and the IRS notes a treaty can reduce the rate or exempt the income; check the treaty for the country you expect to live in and the tax treaty glossary page before relying on any rate.
• Tax in your new country on the Roth. If it taxes a qualified Roth payout at 10%, the Roth keeps $404,161 instead of $449,068, trails by $38,582, and the tie moves to a 36.1% traditional payout tax. The calculator takes that rate as an input but cannot compute it; if your destination taxes retirement income on a schedule of its own, the custom builder at MakeMyCalculator can turn that schedule into a calculator you then feed back into this one.
• Taking it out before 59½. The same saver stopping at 50 after 15 years has a traditional balance of $251,290 taxed at 40% (30% plus the 10% additional tax), keeping $150,774; the Roth's $178,416 is $106,500 of contributions returned untaxed plus $71,916 of earnings taxed at 40%, keeping $149,650. Traditional leads by $1,124 and the tie moves to a 30.6% payout tax, before the 10%. At 45 after 10 years the Roth leads by $4,359.

What to do first

1. Write down two rates: your federal bracket plus state rate on the next dollar of pay today, and the total you expect a traditional payout to face after you leave (the 30% default, any treaty rate, what Form 1040-NR might return, and what your new country adds after any credit it gives for US tax).
2. Run the Roth or traditional if you might leave the US calculator with your contribution, age and years, and read the tie rate first; if your expected payout tax is within a few points of it, the choice is close and splitting between the two buckets costs little.
3. Check the year you expect to leave with the substantial presence test calculator (a green card is a separate test), since withholding depends on your status when the payment is made and the year's tax on your status during the year (a year you leave partway is dual-status), and give the custodian a Form W-8BEN before any payout once you are a nonresident.

What this does not model

The calculator holds the payout tax rate you enter; it does not look up treaty rates, estimate a Form 1040-NR, apply state tax on the payout or after you leave, convert currency, or model the dual-status year, the exceptions to the 10% additional tax, payouts spread over several years, required minimum distributions, the employer match or the five-year clock's mid-year details. Taxes in the country you move to are an input, not an output. Growth figures assume a steady return and are not forecasts.

Run your own figures in the Roth or traditional if you might leave the US calculator, read the library chapter on Roth or traditional if you might leave, and see the glossary pages for Roth vs traditional and nonresident retirement withdrawals.

Not tax or legal advice. US rules as published on November 10, 2026; withholding on a specific payout depends on your status, your plan's paperwork and any treaty.