Traditional vs Roth IRA Calculator
How It Works
The choice between a Traditional IRA and a Roth IRA is one of the most consequential retirement planning decisions you can make — and it comes down to a single question: will your income tax rate be higher now, or in retirement? Both accounts offer powerful tax advantages, but they deliver them at opposite ends of your career.
A Traditional IRA gives you a tax break today. Your contributions may be tax-deductible (subject to income limits if you have a workplace retirement plan), reducing your taxable income in the year you contribute. Inside the account, your investments grow tax-deferred — you pay no taxes on dividends, interest, or capital gains year by year. When you withdraw funds in retirement, you pay ordinary income tax on the full amount withdrawn.
A Roth IRA flips this structure. Contributions are made with after-tax dollars — no deduction today. But the account grows completely tax-free, and qualified withdrawals in retirement (after age 59½ and five years of account age) are entirely tax-free. You owe nothing to the IRS when you withdraw from a Roth IRA in retirement.
This calculator models both strategies with the same annual contribution amount — the critical difference is the tax treatment at withdrawal. The Traditional balance is taxed at your expected retirement tax rate before you can spend it. The Roth balance is available in full. When your retirement tax rate is higher than your current rate, Roth wins. When retirement taxes are lower, Traditional generally wins on an after-tax basis. When rates are equal, the two strategies produce identical after-tax results.
Key factors in your decision: If you're early in your career and expect income to grow substantially, you're likely in a lower tax bracket now than you will be later — a strong argument for Roth. If you're in peak earning years and expect a lower income in retirement, Traditional may preserve more after-tax wealth. Congressional changes to tax law can shift this calculation, making tax diversification (contributing to both types) a prudent hedge.
Beyond the tax rate question, Roth IRAs have no required minimum distributions (RMDs) during the account owner's lifetime. Traditional IRAs require RMDs starting at age 73, forcing withdrawals even if you don't need the money. For those who want to pass retirement savings to heirs, Roth accounts can be more tax-efficient. These factors are outside the scope of this calculator's comparison but matter in long-term estate planning.
Income limits apply to direct Roth IRA contributions. For 2026, single filers earning over $161,000 and married filers over $240,000 cannot contribute directly to a Roth IRA. The "backdoor Roth" conversion strategy exists for those above the limit — this calculator models the straightforward contribution scenario. The 2026 IRA contribution limit is $7,000 ($8,000 if age 50 or older).
Formula Breakdown
Both strategies use the same compound growth formula applied annually: Balance(year) = (Balance(year-1) + annualContribution) × (1 + returnRate) The difference is at withdrawal: - Traditional final after-tax = finalBalance × (1 − retirementTaxRate) - Roth final value = finalBalance (no tax applied) Example (30 years, 7% return, $7,000/year contribution, 0 initial balance): - Both accounts accumulate the same gross balance (~$661,000) - At 20% retirement tax: Traditional after-tax = $661,000 × 0.80 = $528,800 → Roth wins - At 0% retirement tax: Traditional = $661,000, Roth = $661,000 → Tie The crossover point on the chart shows the year when after-tax values diverge — always the first year when retirementTaxRate > 0.
Related Calculators
401(k) Retirement Calculator
Calculate your 401(k) retirement savings with employer match. See your projected balance at retirement, total contributions vs investment growth, and how starting early compounds your wealth.
Compound Interest Calculator
Calculate compound interest with monthly contributions. See your final balance, total contributions, and interest earned with an interactive growth chart. Free compound interest calculator.
Income Tax Estimator
Estimate your 2026 federal income tax based on your gross income and filing status. See your effective tax rate, marginal tax rate, and bracket-by-bracket breakdown.
Debt Payoff vs Investing Calculator
Should you pay off debt or invest extra money? Compare net worth outcomes for both strategies. See exactly how much extra cash at the end of 30 years from paying off debt first versus investing the difference.