conversation: User (iMathGoodiEnglishBad): "When trying to figure out what percent of my income goes towards my Roth 401(k), since it's after taxes, I need to find this percentage based off of my take home pay, correct?\n\nI make $62,000 a year, my take home is $40,800 a year. If I want to contribute 7% of my salary towards retirement, it would be $2,856. As opposed to a traditional 401(k) where it would be $4,340? Am I seeing this correctly?"
  Self: "7% of your salary means 7% of your gross. If you elect 7%, then the $4340 amount is what gets sent to the 401(k). It's just that the $4340 will be included in your income at tax time.\n\nThe contribution maximum is $18000. You would have to elect a 29% contribution to achieve that. 62000 * 0.29 ≈ $18000.\n\nIf you really just want to contribute 7% of your take home amount, then to send $2856 into the Roth, you would elect 2856/62000 = 4.6% of your gross."
  User (iMathGoodiEnglishBad): "Ahh I see. So if i did a traditional, that $4340 would be deducted from my income, and I would be taxed less. Correct?"
  Self: "Yes. If you use traditional 401(k), your W-2 box 1 would show your total wages as $57660. You would not be paying taxes now on those $4340. Instead, the money would grow and you would pay taxes later, when you withdraw the money and its growth, and at whatever tax rate applies then.\n\nUsing Roth now would be preferable if you think your tax rate in retirement is going to be higher than your tax rate is now."
  