Why is my net pay so much less than my salary?

Taxes, benefits, and retirement contributions all come out before you see a dime. Federal income tax, Social Security (6.2%), Medicare (1.45%), state taxes, health insurance, and 401(k) contributions can easily total 30–40% of your gross pay.

Why doesn't my last paystub match my W-2?

Your W-2 shows taxable wages — which are lower than your gross pay because pre-tax deductions (401k, HSA, health insurance) reduce them. Your paystub shows gross pay before those deductions.

What is OASDI and why is it so much?

OASDI is Social Security — 6.2% of every dollar you earn up to $168,600/year. It's one of the largest deductions on most paystubs, funding your future retirement and disability benefits.

Is my paystub data safe when I upload it?

Your PDF is sent securely to Anthropic's API for analysis. We have no backend server, so we never see or store your data. Anthropic may retain inputs briefly per their safety policy but does not use them for training.

Benefits· 6 min read · May 12, 2026

Traditional 401(k) vs. Roth 401(k): how to decide from your paystub

Same employer, two flavors of 401(k). The decision is simpler than financial blogs make it sound — and your paystub has most of what you need to make it.

If your employer offers both Traditional and Roth 401(k), the choice between them is one of the highest-leverage financial decisions you'll make this year. And the deciding factor isn't market timing — it's a tax bracket bet.

The 60-second version

Traditional 401(k): no tax now, taxable in retirement
Roth 401(k): tax now, no tax (ever) in retirement
Same annual limit ($23,500 in 2025); you can split between them
Employer match always goes into the Traditional side (unless your plan explicitly allows Roth match)

The decision in one question

Will I be in a higher or lower tax bracket in retirement than I am today?

Higher in retirement → Roth wins. You pay tax at today's lower rate. Lower in retirement → Traditional wins. You skip today's higher rate.

How your paystub helps you decide

Find your federal income tax withholding line (FWT or FIT) and your gross pay year-to-date. Divide one by the other. That's your effective federal tax rate. Compare it to what you think you'll pay in retirement.

Rules of thumb

Early career, under 24% bracket → Roth. Your tax rate today is probably lower than your peak-earning future.
Peak career, 32%+ bracket → Traditional. You're at your tax ceiling. Defer.
Middle career, 22–24% bracket → 50/50 split is reasonable. You're hedging.
Plan to retire in a no-income-tax state → tilts Traditional.
Already expect a generous pension → tilts Roth (your pension keeps you in a high bracket).

The biggest mistake

Contributing $0 to either. If your employer matches and you're not contributing enough to get the full match, you're walking away from a guaranteed 50–100% return. Roth vs. Traditional is a sophistication. Skipping the match isn't.

On your W-2 next year

Traditional contributions → Box 12, code D
Roth contributions → Box 12, code AA
Both reduce nothing on Box 3 (Social Security wages) — only Traditional reduces Box 1

Final thought

Most personal finance writing makes this decision feel high-stakes. It isn't — both options are good. The lift from contributing more is bigger than the lift from picking the 'right' kind. Set your contribution percentage first, pick the type second.

See it in your own paystub

Upload your PDF and the AI will show how every line plays into the bigger picture.

Upload paystub →File with TurboTax →

Affiliate link — we may earn a commission at no cost to you.

← More explainers