Roth vs Traditional IRA Calculator
Same dollars, two tax treatments. See your after-tax spendable balance at retirement under each account.
Finance tools · Free
About the Roth vs Traditional IRA Calculator
"Roth or Traditional?" is one of the most common retirement questions — and the answer depends on one thing: when you'd rather pay tax. Traditional contributions cut your tax bill today; Roth contributions cost you tax now in exchange for tax-free withdrawals in retirement. This calculator shows the after-tax outcome of both so you can stop guessing.
Enter your annual contribution, years to retirement, expected return, and your tax rate today and in retirement. The tool grows both accounts, applies the appropriate taxes, and reports what you could spend from each (in future dollars) and the difference.
The break-even rule is simpler than the debate suggests. If your tax rate is higher now than it will be in retirement, Traditional wins. If it's lower now, Roth wins. If they're equal, it's effectively a tie — and Roth's other advantages break the deadlock.
Why Roth wins for many young earners. You're likely in a low bracket early in your career, so paying a small tax bill now to never pay tax on decades of growth is a great trade. Roth IRAs also have no required minimum distributions and let you withdraw contributions penalty-free, making them more flexible than Traditional accounts.
Diversify tax exposure if you can. Maxing a Traditional 401(k) for the deduction while funding a Roth IRA hedges both directions — you'll have both taxable and tax-free buckets to draw from, which gives you real control over your tax bill in retirement. IRAs are US accounts with IRS contribution and income limits this tool doesn't apply; this is general education, not tax or financial advice.
How to use it
- Set the contribution. Annual amount you'd put into either account.
- Set years to retirement. How long the money will compound.
- Set the expected return. ~7% is a common long-term assumption.
- Enter your current tax rate. Your marginal rate today (federal plus state).
- Enter your retirement tax rate. Your best guess for the bracket you'll be in at withdrawal.
- Compare after-tax outcomes. See which account leaves you more, and why.
Frequently asked questions
How does the Roth vs Traditional IRA calculator compare the two accounts?
It uses the same gross contribution for both: the Traditional IRA invests the full amount and is taxed at your retirement rate on withdrawal, while the Roth invests what's left after today's tax and is withdrawn tax-free. With the defaults ($7,000 a year for 30 years at 7%, 24% tax now, 22% later) the Traditional leaves about $515,756 to spend versus about $502,531 for the Roth, so Traditional comes out roughly $13,225 ahead.
Why does the Roth vs Traditional IRA calculator show a tie when both tax rates are equal?
Because taxing the money before it grows or after it grows gives the same result when the rate is the same: multiplying by (1 − tax rate) at the start or at the end is mathematically identical. That is why the result hinges on whether you expect your tax rate to be higher or lower in retirement. Factors outside the model, such as flexibility and required minimum distributions, decide the tie.
Does the Roth vs Traditional IRA calculator assume I invest the Traditional tax savings?
No. It compares the same gross contribution, which implicitly assumes the tax you save with a Traditional IRA is spent rather than invested. If you would contribute the full annual limit to either account, a Roth effectively shelters more after-tax money, which tilts the comparison toward the Roth in a way this tool does not capture.
Are the Roth vs Traditional IRA calculator results in today's dollars?
No. Balances are nominal future dollars at the return you enter, with no inflation adjustment. The Roth-versus-Traditional comparison still holds because both accounts are treated the same way, but if you want purchasing power, enter a return net of expected inflation.
Which tax rate should I enter as the retirement rate in the Roth vs Traditional IRA calculator?
Use the rate you expect your Traditional withdrawals to be taxed at, counting other retirement income like Social Security, pensions and required distributions from other accounts. Because withdrawals can fill lower brackets first, the rate on those dollars may be below your top bracket. Running a few scenarios (say, a few points above and below your guess) shows how sensitive the answer is.
What does the Roth vs Traditional IRA calculator leave out?
It is US-specific and does not apply IRS contribution limits, Roth income eligibility limits, the phase-out of Traditional IRA deductions when you're covered by a workplace plan, early-withdrawal penalties or required minimum distributions. It also assumes a constant return and flat tax rates. This is general education, not financial or tax advice; confirm the rules for your situation with a qualified professional.
Guides that use this tool
Related tools
- Compound Interest Calculator — See how your money grows with the power of compounding — visualised with charts and AI explanations. (Free, AI-powered)
- Debt Payoff Calculator — Snowball vs avalanche — let AI pick the strategy that gets you debt-free fastest. (Free, AI-powered)
- Budget Planner (50/30/20) — Build a personal budget with the proven 50/30/20 framework + AI-powered tips. (Free, AI-powered)
- Loan & Mortgage Calculator — Calculate monthly payments, total interest, and amortisation for any loan or mortgage. (Free, AI-powered)
- Credit Score Simulator — Simulate how actions impact your credit score with AI-powered explanations. (Free, AI-powered)
- Side Hustle Income Tracker — Track every dollar from your hustles — premium dashboard with charts and insights. (Premium)