Roth vs. Traditional IRA calculator

The one-sentence difference between Roth and Traditional IRAs

With a Traditional IRA, you get the tax break today and pay income tax when you withdraw in retirement. With a Roth IRA, you pay tax today and every dollar you withdraw in retirement — contributions and growth — comes out tax-free. Every other rule, limit, and wrinkle is a footnote to that single sentence.

Which one wins depends on exactly one comparison: your marginal tax rate today vs. your expected marginal tax rate in retirement. If your rate will be lower in retirement, Traditional wins because you deduct at the higher rate and pay at the lower one. If your rate will be higher in retirement (either because your income goes up or because Congress raises rates), Roth wins. If the rates are the same, the two are mathematically identical — a result most people find deeply counterintuitive the first time they see it.

2026 IRA contribution limits

• Under age 50: $7,000 total across both Roth and Traditional combined.
• Age 50 and up: $8,000 (includes the $1,000 catch-up).
• Roth income limits (2026): full contribution below $150K single / $236K married filing jointly; phased out above $165K / $246K. Above those thresholds, direct Roth contributions are not allowed, but the backdoor Roth still works.
• Traditional income limits: contributions are always allowed, but the tax deduction phases out if you (or a spouse) have a workplace retirement plan.

How this calculator compares the two

The calculator projects a future balance by growing your annual contribution at the rate you specify (defaults to 8% — roughly the long-term S&P 500 after inflation). It then applies two tax treatments:

• Roth after-tax balance equals the full future balance. You already paid tax on the way in, and withdrawals after age 59½ are 100% tax-free.
• Traditional after-tax balance is the future balance minus income tax at your expected retirement rate. This is what actually lands in your checking account.

The third number worth watching is upfront tax savings from the Traditional deduction. If you are disciplined enough to invest those savings — rather than spend them on the same lifestyle you had before — Traditional tightens considerably. Most people aren't that disciplined, which is one of the hidden reasons Roth often beats Traditional in practice even when it shouldn't on paper.

When Roth almost always wins

• You're in a low tax bracket today.If you're a 22%-bracket single filer or a 12% married filer, paying tax now at those rates is cheap. Locking in tax-free growth for 30 years is the single best use of those brackets.
• You're young. Compounding works in your favor. A $7,000 contribution at 25 becomes roughly $225,000 at 65 at 8% returns — and in a Roth, every penny of that $218,000 gain is untaxed forever.
• You expect higher income later. Roth contributions now at a 24% marginal rate are better than Traditional contributions taxed at 32% or 35% later.
• You want flexibility. Roth contributions (not earnings) can be withdrawn at any time, at any age, without tax or penalty. It is the only retirement account that doubles as a mid-career liquidity hedge.
• You don't want Required Minimum Distributions.Roth IRAs have no RMDs during the original owner's lifetime. Traditional IRAs force you to start withdrawing at age 75 whether you need the money or not.

When Traditional almost always wins

• You're in a high tax bracket today. A 32% or 37% marginal rate makes the upfront deduction massively valuable. If you expect retirement spending to land in the 22–24% bracket, Traditional wins on a straight tax-rate comparison.
• You're a high earner who can't contribute to Roth directly. Without a 401(k) at work, a deductible Traditional IRA is your only option — though in this case the backdoor Roth is usually better.
• You plan to retire early and have several years of low-income living. Those low-income years are your opportunity to do Roth conversions from your Traditional at a low tax rate — giving you the best of both.

The "both" strategy most people should use

Tax diversification is underrated. If you're a 24%-bracket earner and your retirement rate is genuinely uncertain (likely), splitting contributions between Roth and Traditional — or between a Traditional 401(k) at work and a Roth IRA on the side — gives you tax flexibility in retirement. In any given year, you can draw from whichever bucket minimizes your tax bill.

A common workable split:

• Workplace 401(k): Traditional, up to the employer match. Capture free money first, defer tax on a large chunk of income.
• IRA: Roth, to build a tax-free bucket for retirement.
• Beyond the match:continue in Traditional 401(k) if you're in a high bracket, or a Roth 401(k) if your plan offers one and your bracket is moderate.

Watch-outs people get wrong

Ignoring state income tax

Your marginal rate is federal + state. A California resident in the 32% federal bracket is really at 41% after CA's 9%+ state rate. If you'll retire in Florida or Texas, Traditional gets a massive boost because your retirement state rate could be zero.

Forgetting about RMDs

Traditional balances force Required Minimum Distributions starting at age 75 (SECURE 2.0). Those distributions can push you into higher brackets and increase Medicare premiums. Roth has no RMDs, so a big Roth balance is a gift to both your retirement and your heirs.

Using today's rate as the retirement rate

Most people will have lower taxable income in retirement than during their peak earning years. But not always — if you're accumulating a very large balance, mandatory distributions at age 75 can produce higher taxable income than you had while working. Model your retirement rate realistically, not optimistically.

FAQ

Can I have both?

Yes — but the combined contribution can't exceed the annual limit ($7,000 under 50, $8,000 at 50+). A Roth IRA and a Traditional IRA share that cap.

Is the backdoor Roth legal?

Yes, though it requires care to avoid the pro-rata rule if you have other pre-tax IRA balances. It's the standard move for high earners above the direct Roth income limits.

What if I'm not sure what my retirement tax rate will be?

Split the difference. Contribute half to each. When you're 60 and the answer is clearer, you can shift allocation or do Roth conversions from the Traditional.