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Roth IRA vs. Traditional IRA Calculator
Compare a Roth IRA and Traditional IRA side by side. See which account type leaves you with more money after taxes — based on your current tax rate, expected retirement tax rate, contribution amount, and time horizon.
The right answer depends entirely on your tax situation — this calculator shows you the numbers for both paths.
Roth IRA vs. Traditional IRA
Roth Advantage: $0
- Roth IRA
- Traditional IRA
"The best time to start a Roth IRA was yesterday. The second best time is today."
- Retirement Planning Principle
Roth vs. Traditional IRA: the core difference
Both IRAs offer tax-advantaged retirement savings, but they differ in when the tax break occurs. A Traditional IRA may give you a tax deduction today — contributions reduce your taxable income now, investments grow tax-deferred, and you pay ordinary income tax when you withdraw in retirement.
A Roth IRA gives you the tax break later — contributions are made with after-tax dollars (no deduction today), but investments grow completely tax-free and qualified withdrawals in retirement are 100% tax-free.
The math boils down to one question: will your tax rate be higher now or in retirement? If you expect to be in a higher tax bracket in retirement, pay the tax now with a Roth. If you expect a lower rate in retirement, defer the tax with a Traditional. If rates are equal, the accounts produce identical results.
This calculator models both paths side-by-side, accounting for the tax savings from Traditional contributions being reinvested in a taxable account — the most accurate apples-to-apples comparison method.
lightbulb Example Comparison
You're 35, contribute $7,000/year, earn 7% annually, and retire at 65. You're in the 22% tax bracket now and expect to be in the 22% bracket in retirement.
Roth IRA: You contribute $7,000 of after-tax money. The account grows to ~$756,000 tax-free. You keep all $756,000.
Traditional IRA: You contribute $7,000 pre-tax, saving $1,540/year in taxes. The account also grows to ~$756,000 — but you owe 22% tax on every withdrawal. After-tax value: ~$590,000. Plus, you earned $1,540/year in tax savings; if invested at 7%, those savings add ~$166,000. Net Traditional value: ~$756,000.
When current and retirement tax rates are equal, the accounts produce the same result. The Roth wins when retirement rates are higher; the Traditional wins when they're lower. Uncertainty about future tax rates often tips the scales toward the Roth.
Roth vs. Traditional IRA FAQs
Who can contribute to a Roth IRA?
Roth IRA contributions phase out at higher incomes. For 2024, the phase-out begins at $146,000 for single filers and $230,000 for married filing jointly. Above $161,000 (single) or $240,000 (MFJ), direct Roth contributions are not allowed — though the "backdoor Roth" strategy is available to high earners.
Is a Traditional IRA contribution always tax-deductible?
Not always. If you or your spouse have a workplace retirement plan (401(k), 403(b), etc.), the deductibility of Traditional IRA contributions phases out at certain income levels. For 2024, the phase-out for single filers with a workplace plan starts at $77,000; for married filing jointly it starts at $123,000. Without a workplace plan, contributions are fully deductible regardless of income.
Can I have both a Roth and Traditional IRA?
Yes — you can contribute to both types of IRA in the same year, but your total contributions across all IRAs cannot exceed the annual limit ($7,000 in 2024, or $8,000 if age 50+). Many people split contributions strategically based on their current and expected future tax situations.
What about Required Minimum Distributions (RMDs)?
Traditional IRAs require mandatory withdrawals starting at age 73 (under current law). Roth IRAs have no RMDs during the owner's lifetime, making them excellent estate planning tools — assets can be left to grow tax-free indefinitely and passed to heirs. This is a significant advantage of the Roth not fully captured in this calculator.
IRA terminology
Traditional IRA
Individual Retirement Account funded with pre-tax (or tax-deductible) contributions. Investments grow tax-deferred. Withdrawals in retirement are taxed as ordinary income. RMDs required starting at age 73.
Roth IRA
IRA funded with after-tax contributions. Investments grow tax-free. Qualified withdrawals in retirement are 100% tax-free. No RMDs during the owner's lifetime. Income limits apply for direct contributions.
Tax-Deferred vs. Tax-Free Growth
Tax-deferred (Traditional) means you defer taxes until withdrawal — the government will eventually collect. Tax-free (Roth) means the government's claim on that money is settled upfront. With Roth, growth on decades of compounding is never taxed.
Marginal Tax Rate
The rate applied to your next dollar of income. Because the US tax system is progressive, your marginal rate is higher than your effective rate. IRA deduction value and Roth contribution cost are both determined by the marginal rate, not the effective rate.
Backdoor Roth IRA
A strategy for high earners above the Roth income limit: make a non-deductible Traditional IRA contribution, then convert it to a Roth. Effectively achieves a Roth contribution regardless of income. Subject to the pro-rata rule if you have other pre-tax IRA balances.
2024 Contribution Limits
$7,000/year for those under 50; $8,000/year for those 50 and older (catch-up contribution). This limit applies to total IRA contributions across both Roth and Traditional accounts combined.
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