Traditional vs Roth IRA Calculator
Free traditional vs Roth IRA calculator — compare after-tax retirement value based on contribution, tax rates, and investment growth.
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How it works
Enter annual contribution, years invested, expected return, current tax rate, and expected retirement tax rate to compare after-tax outcomes.
About Traditional vs Roth IRA Calculator
Informational only — not professional advice. Report an error.
Every tax season someone asks: should I fund a traditional IRA or a Roth? Both shelter investments from annual capital gains and dividend taxes, but they differ on when you pay income tax. Traditional contributions may be deductible now with taxable withdrawals later; Roth uses after-tax dollars for qualified tax-free withdrawals in retirement.
The better account depends on your current marginal tax rate versus expected rate in retirement, how long money compounds, and whether you maximize the same pre-tax budget in both scenarios. This calculator invests the same pre-tax equivalent in each path and compares after-tax values at the end of your horizon.
Enter annual contribution, years, expected return, current tax rate, and assumed retirement tax rate. Outputs include traditional balance, Roth balance, after-tax values, Roth advantage in dollars, and a break-even retirement tax rate where both choices tie. Positive Roth advantage means after-tax Roth value exceeds traditional at your assumed retirement rate.
Higher earners today often lean traditional when deductions save at 24% or more; early-career savers in lower brackets often favor Roth to lock in today's rate. Roth also avoids required minimum distributions on the original owner's account and leaves tax-free inheritances for many beneficiaries.
Here's a framing example: if you can contribute $7,000 and wonder whether the deduction now beats tax-free later, the break-even retirement rate tells you how high future taxes must go before traditional wins. Many savers use both account types over a career — traditional during peak earning years and Roth during lower-income stretches.
Simplified model — ignores state taxes, income limits, pro-rata rules, and employer plan interactions. Does not model backdoor Roth, mega backdoor, or Saver's Credit. Verify IRS limits annually and revisit after major life events — marriage, home purchase, career change, or inheritance.
State tax treatment of IRA deductions and withdrawals varies — high-tax states like California or New York can shift the break-even point even when federal math favors one account type over the other.
Quick tips
- Uncertain about future tax rates? Split contributions across both account types.
- Roth conversions in low-income years can reduce future RMD tax — plan with a tax advisor.
- Max employer 401(k) match before extra IRA contributions — match is immediate return.
- Want growth-only Roth projections? The Roth IRA Calculator focuses on that path.
Formulas
traditionalAfterTax = balance × (1 − retirementTaxRate)rothContribution = preTaxBudget × (1 − currentTaxRate)
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