Roth vs Traditional IRA Calculator
Compare Roth IRA vs Traditional IRA to find the better tax strategy.
What this calculator does
This calculator compares a Roth IRA against a Traditional IRA over your remaining working years. It grows both accounts identically, then applies your expected retirement tax rate to the Traditional balance and leaves the Roth untouched, so the results table shows the Traditional pre-tax balance, its after-tax value, and the Roth alongside it.
The gap between the two after-tax figures is the entire decision, and it is driven by one variable: whether your marginal rate in retirement is higher or lower than the rate you avoid today. Everything else, including the return assumption, affects both accounts equally and cancels out.
When to use it
The natural moment is when opening an IRA or setting up an annual contribution, but it is worth rerunning whenever your income changes materially. A promotion into the 32 percent bracket strengthens the case for Traditional; a sabbatical, a parental leave year or early retirement creates a low-income window where Roth wins decisively.
It is also useful for anyone already holding a large 401(k). If nearly all your retirement savings are pre-tax, directing IRA contributions to a Roth builds the tax diversification that gives you control over taxable income later, even when the arithmetic on a single year's contribution looks close to even.
Understanding the inputs
The contribution percentage of salary should produce a dollar figure at or below the $7,000 limit, since the calculator does not enforce it. Current savings should reflect the account type you are modeling rather than every retirement balance you hold, because mixing pre-tax and Roth money in one input makes the after-tax comparison meaningless.
Expected return can be the same for both by definition, so do not spend long on it. The assumption that actually decides the answer is your retirement tax rate. Be realistic: most retirees land in a lower bracket than their peak earning years, but a large Traditional balance plus Social Security plus RMDs can easily keep you in the same one.
How is this calculated?
Traditional: Pre-tax grows tax-deferred. Roth: After-tax grows tax-free.
A worked example
Contributing $7,000 a year for 30 years at 7 percent builds a balance of roughly $712,000 from $210,000 of contributions. In a Roth, all of it is spendable. In a Traditional taxed at 22 percent on withdrawal, about $555,000 remains, so the Roth advantage is around $157,000.
Change the retirement rate to 12 percent and the Traditional keeps roughly $626,000, cutting the Roth advantage to about $85,000. Against that, the Traditional contributor also received a deduction each year worth $1,680 at a 24 percent marginal rate, which is $50,400 over 30 years before any growth on it.
Limitations and assumptions
This is a projection under assumptions, not a prediction. It applies one flat return, one fixed retirement tax rate and a constant contribution, and it ignores the value of the annual deduction a Traditional contribution provides unless you separately invest it. Sequence-of-returns risk means both balances could differ substantially from the projection.
It also does not model income phase-outs, deductibility limits, the pro-rata rule affecting backdoor conversions, state income tax, required minimum distributions, or the possibility of drawing from both accounts strategically in retirement. The retirement tax rate is a guess about future legislation as much as future income, so test a range rather than trusting one figure.
Common Questions
- What is the actual difference between the two?
- Timing of tax. Traditional IRA contributions may be deductible now and every dollar withdrawn later is taxed as ordinary income. Roth contributions give no deduction but qualified withdrawals are entirely tax-free. Both grow untaxed in the meantime, so the only question that matters is which marginal rate is higher, today's or tomorrow's.
- How much can I put in for 2025?
- Seven thousand dollars across both account types combined, or $8,000 if you are 50 or older. It is a single shared limit, not $7,000 each. You also need earned income at least equal to your contribution, though a spousal IRA lets a non-earning partner contribute against household income.
- Am I eligible for a Roth IRA?
- Only below the income phase-outs, which for 2025 run from $150,000 to $165,000 of modified AGI filing single, and $236,000 to $246,000 filing jointly. Above those you cannot contribute directly, though a backdoor Roth, contributing to a non-deductible Traditional IRA then converting, remains available.
- Is my Traditional contribution deductible?
- It always is if neither you nor your spouse is covered by a workplace plan. If you are covered, deductibility phases out between $79,000 and $89,000 of modified AGI filing single, and $126,000 to $146,000 jointly for 2025. A non-deductible Traditional contribution is the worst of both worlds and should usually be converted.
- Which should I pick if I genuinely cannot tell?
- Split the contribution. Holding both gives you the ability to control taxable income in retirement by choosing which account to draw from each year, which is worth real money once Social Security taxation, Medicare IRMAA brackets and required minimum distributions are all interacting.
- Does the Roth really shelter more money?
- Yes, and this is the subtle point. Both accounts cap contributions at $7,000, but $7,000 in a Roth is $7,000 of after-tax money while $7,000 in a Traditional is pre-tax. Maxing a Roth therefore shelters a larger real amount, which favors Roth for anyone able to contribute the full limit.
- Can I get at the money early?
- Roth contributions, though not earnings, can be withdrawn at any time tax and penalty free, which makes a Roth a reasonable secondary emergency reserve. Traditional withdrawals before 59 and a half generally incur income tax plus a 10 percent penalty, with narrow exceptions for first homes, education and medical costs.
- What about required minimum distributions?
- Traditional IRAs require distributions from age 73, whether you need the income or not, and those distributions are taxable. Roth IRAs have no lifetime RMDs at all. Over a long retirement that difference compounds, and it also makes a Roth the more efficient asset to leave to heirs.
- Which is better for inheritance?
- Roth, clearly. Non-spouse beneficiaries must empty an inherited IRA within ten years under the SECURE Act. Emptying a Traditional IRA means ten years of taxable income landing on someone likely in their peak earning years, while an inherited Roth comes out tax-free.
- How reliable is a retirement tax rate assumption?
- Not very, which is the honest weakness of this comparison. It depends on future legislation, your own income, and where you live. The current individual rate cuts are legislated to expire, which is one argument for locking in tax-free Roth growth rather than betting on lower rates later.