Roth vs. Traditional IRA Calculator

Roth and Traditional IRAs both shelter investment growth from tax: the difference is when you pay. A Traditional IRA gives you a deduction now and taxes withdrawals in retirement; a Roth gives no deduction now but makes qualified withdrawals completely tax-free. Which wins comes down to one comparison: your tax rate today versus your tax rate when you'll withdraw.

For a closer look at how contributions compound over decades on their own, outside the Roth-versus-Traditional comparison, try our compound interest calculator.

This calculator runs both side by side from the same before-tax dollars, compounding each year and applying the right taxes at the right time, so you can see which leaves you with more spendable money in retirement.

How does this calculator work?

Enter your before-tax annual contribution, your beginning and retirement ages, the return you expect to earn, and your marginal tax rate now versus in retirement.

Starting from the same before-tax amount, the Traditional IRA invests the full contribution and is taxed at your retirement rate when you withdraw; the Roth invests the after-tax amount (contribution × (1 − current tax rate)) and grows completely tax-free. Both compound each year, with the contribution added at the start of the year.

Compare the Roth's ending balance against the Traditional's balance less the taxes deferred until retirement. The Roth comes out ahead whenever your retirement tax rate is at or above your current rate.

Worked example

Contribute $6,500 of before-tax income annually from age 30 to 65, earning 7%, at a 22% tax rate now and 24% in retirement.

Before-tax contribution

$6,500/yr

Roth contribution (after 22% tax)

$5,070/yr

Roth balance at 65 (tax-free)

$807,841

Traditional balance at 65

$1,035,693

Traditional after 24% tax

$787,127

How the numbers work

Both start from the same $6,500 of before-tax income. The Traditional invests the whole $6,500; the Roth pays 22% tax first, so only $5,070 goes in.

Each amount is contributed at the start of every year and compounds at 7% for 36 years. The Traditional grows to $1,035,693 and the Roth to $807,841, with the Roth smaller purely because less was invested.

Now apply the taxes that are still owed. The Traditional is taxed 24% on withdrawal: $1,035,693 × (1 − 0.24) = $787,127. The Roth owes nothing. So the Roth's $807,841 edges out the Traditional's $787,127: the locked-in lower 22% rate wins.

Even though the Traditional IRA grows to a larger balance (it invested the full $6,500), once the 24% retirement tax is applied the Roth comes out ahead, $807,841 versus $787,127, because its withdrawals are tax-free and its rate was locked in at the lower 22%.

Flip the assumption to a lower tax rate in retirement than today, and the Traditional wins instead. That single rate comparison is the heart of the decision.

How to decide between them

The clean rule: expect a higher tax rate in retirement, favor the Roth (pay tax now at the lower rate); expect a lower rate, favor the Traditional (defer tax to the cheaper future). Young savers early in their careers often expect rising income, which tilts toward the Roth, while peak earners may prefer the immediate Traditional deduction.

Beyond the math, the Roth offers flexibility a Traditional doesn't: no required minimum distributions during your lifetime, and contributions (not earnings) can be withdrawn anytime without penalty. Many savers split contributions across both to hedge against an uncertain future tax code. If you're weighing a loan from your workplace plan instead, our 401(k) loan calculator shows the real cost of borrowing against those tax-deferred dollars.