Roth vs Traditional IRA Calculator
Compare the after-tax retirement outcome of Roth vs Traditional IRA contributions based on your current and expected future tax rates.
The Roth vs Traditional decision is one of the most consequential and most misunderstood tax decisions in personal finance. The mathematically correct answer almost always comes down to one question: will your tax rate be higher now or in retirement? If higher now, Traditional wins. If higher in retirement, Roth wins. The complication is that future tax rates are unknown.
If your current and retirement tax rates are identical, Roth and Traditional produce exactly the same after-tax wealth. The differences only emerge when the rates differ. This is the core insight that simplifies the decision.
The core math
With a Traditional IRA: you contribute pre-tax dollars, the investment grows tax-deferred, and you pay income tax on withdrawals. With Roth: you contribute after-tax dollars, the investment grows tax-free, and withdrawals are tax-free. If tax rates are equal, both approaches produce identical after-tax wealth. Traditional wins when current rates exceed retirement rates. Roth wins when retirement rates will exceed current rates, or when tax-free growth is particularly valuable.
The case for Roth in your 20s and 30s
Younger workers are typically in lower tax brackets than they will be in their peak earning years. Contributing to a Roth when you are in the 12% or 22% bracket and withdrawing in retirement when you might be in a higher bracket (or when Social Security and RMDs push you into a higher bracket than expected) produces better outcomes. The tax-free compound growth over 30-40 years is also extremely valuable.
Required Minimum Distributions
Traditional IRAs and 401(k)s require minimum distributions starting at age 73. These RMDs can push retirees into higher tax brackets unexpectedly, especially when combined with Social Security income and other retirement account withdrawals. Roth accounts have no RMDs during the account owner's lifetime, making them more flexible in retirement. This RMD consideration often tips the balance toward Roth for people who expect significant retirement income from multiple sources.
Frequently asked questions
Can I contribute to both Roth and Traditional IRA?
Yes. You can split contributions between Roth and Traditional IRA as long as your total contributions do not exceed the annual limit ($7,000 in 2025, $8,000 if 50+). Many financial planners suggest tax diversification: having both Roth and Traditional accounts in retirement gives you flexibility to draw from whichever produces the better tax outcome in any given year.
What are the income limits for Roth IRA?
Roth IRA contributions phase out for single filers with MAGI above $146,000 (2024) and are eliminated above $161,000. For married filing jointly, the phase-out is $230,000-$240,000. Above these limits, the backdoor Roth IRA strategy allows high earners to convert non-deductible Traditional IRA contributions to Roth.