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The 5% is coming out of my gross pay, not my gross pay less taxes.

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Your 401k contribution should be based on gross pay, not net pay.

This amount is simply deposited into your 401k account as a direct deposit. It should still be accounted for in your taxable income calculation, and taxes will assume this extra income, thereby reducing your net pay.

The same amount would go into your 401k if you were using a traditional 401k, but your taxes would simply be less making your net pay higher.

This is because the systems aren't smart enough to know your tax rate. All they can reliably count on is your gross pay. You have to make the tax correction calculation on your own. For example:

- You want to put 10% in retirement (5% in 401k, 5% in Roth)
- Your gross pay is $1000/check
- 5% to your 401k is $50
- 5% to your Roth is going to be 5%x(1-tax%) since it needs to have taxes removed and is not the same as 5% going into traditional 401k.
- Lets say you are taxed at 20%. Your 5% becomes 4% (5%*(1-.20)=4%.
- Set your Roth witholding to 4% and the numbers would be like you are expecting.

This is how I have to do it in the systems at my work, anyway.