Roth vs. traditional IRA calculator

How this calculator works

Enter your annual IRA contribution, current and expected retirement ages, current marginal federal tax rate, expected marginal tax rate in retirement, and expected annual investment return. The calculator projects the same contribution in both a Roth IRA and a traditional IRA, then compares after-tax values at retirement.

Both accounts are assumed to receive the same annual contribution and earn the same investment return. The key difference is tax treatment: traditional IRA contributions reduce taxable income now but are taxed at withdrawal; Roth IRA contributions use after-tax dollars now but grow and withdraw tax-free.

The determining factor is tax rates. If your retirement tax rate will be lower than your current rate, traditional may win. If your retirement rate will be higher, Roth likely wins. If rates are equal, Roth typically wins slightly due to contribution limit mechanics, but the difference is small.

This model compares same-dollar contributions. For a complete comparison, also consider that traditional tax savings could be invested separately — see the FAQ below.

What affects the result

• Contribution amount — same dollars in both accounts. The 2024 IRA contribution limit is $7,000 ($8,000 if age 50 or older). Roth IRA contributions phase out at higher incomes; traditional contributions are always allowed but may not be deductible above income thresholds.
• Years of growth — longer investment horizons amplify the Roth advantage because more tax-free compounding occurs. At short horizons, the difference shrinks.
• Current vs. retirement tax rate — the core variable. Most people expect to be in a lower tax bracket in retirement; but Roth can still win if tax rates rise generally, if retirement income from other sources is higher than expected, or if required minimum distributions push traditional IRA holders into higher brackets.
• Expected return — higher returns favor the Roth because more tax-free growth occurs. At very low return assumptions, the difference between accounts narrows.

Real-world examples

1. Lower tax rate in retirement. $7,000/year, age 30 to 65, current bracket 22%, retirement bracket 12%, 7% return. Traditional likely wins — deferring at 22% and paying at 12% saves 10 percentage points on a large ending balance.

2. Higher tax rate in retirement. Same inputs but current bracket 12%, retirement bracket 22%. Roth wins — paying 12% now costs less than paying 22% on a large balance later.

3. Equal tax rates. Both brackets 22%. Roth and traditional produce nearly identical after-tax results. Roth has a slight advantage because the $7,000 limit allows more after-tax dollars to grow versus traditional where the limit is on pre-tax dollars.

4. Young, low-income earner. Age 22, current bracket 10%, expected retirement bracket uncertain. Roth is often recommended — paying 10% now is cheap insurance against higher future rates, and decades of tax-free growth amplify the benefit.

Common mistakes

• Ignoring income limits for Roth. Roth IRA direct contributions phase out above $146,000 (single) or $230,000 (married filing jointly) in 2024. Above those limits, a backdoor Roth conversion may be an option — consult a tax advisor.
• Forgetting required minimum distributions (RMDs). Traditional IRAs require minimum withdrawals starting at age 73, which can force higher income (and higher taxes) in retirement. Roth IRAs have no RMDs during the owner's lifetime.
• Assuming retirement tax rates will be low. Social Security income, pension payments, and RMDs from traditional accounts can combine to push retirees into higher brackets than expected. Don't assume retirement automatically means lower taxes.
• Not considering the tax-savings reinvestment. A full traditional contribution gives you a tax refund now. If you invest that refund in a taxable account, the traditional IRA's total after-tax value can exceed this calculator's estimate.
• Choosing one and never contributing to the other. Many financial planners recommend contributing to both — Roth and traditional 401(k) or IRA — to hedge against tax rate uncertainty. Tax diversification in retirement gives flexibility.

When to use this calculator

Use this calculator when deciding between a Roth and traditional IRA contribution for the current year, evaluating whether to make pre-tax or Roth 401(k) elections, or modeling how different tax rate assumptions change the long-term outcome.

Read safe retirement withdrawals for context on how withdrawal taxes affect retirement income. Use the retirement projection calculator for broader retirement balance modeling.

Frequently asked questions

What's the contribution limit for IRAs in 2024? $7,000 per year, or $8,000 if you are age 50 or older. This limit applies across all IRA accounts combined — you cannot contribute $7,000 to a Roth and $7,000 to a traditional IRA in the same year. The limit also cannot exceed your earned income for the year.

Can I contribute to a Roth IRA at any income? Not directly. Roth IRA contributions phase out between $146,000 and $161,000 for single filers and between $230,000 and $240,000 for married filing jointly in 2024. Above the upper limits, direct Roth contributions are not allowed. High earners can use a backdoor Roth conversion: contribute to a non-deductible traditional IRA, then convert to Roth. Tax implications of conversions are not modeled here.

What are required minimum distributions? RMDs are mandatory withdrawals from traditional IRAs (and traditional 401(k)s) beginning at age 73. The amount is based on your account balance divided by your life expectancy factor. RMDs generate taxable income that can push retirees into higher brackets. Roth IRAs have no RMDs during the original owner's lifetime, making them valuable for estate planning and tax control in retirement.

Should I have both a Roth and traditional IRA? Tax diversification in retirement is valuable. Having both types gives you the flexibility to withdraw from whichever account minimizes your tax in any given year. Many advisors recommend building balances in both during your working years — traditional when your bracket is high, Roth when it's lower.

Is a Roth IRA better than a Roth 401(k)? Both offer tax-free growth and withdrawals. Roth 401(k) plans have much higher contribution limits ($23,000 in 2024, $30,500 if 50+) and no income limits, but investment options are limited to what your employer offers. Roth IRAs offer full investment flexibility but lower limits and income restrictions. Many people use both.

Related calculators

Project overall retirement savings with the retirement projection calculator. Maximize employer match with the 401(k) contribution calculator. Estimate retirement withdrawals with the retirement withdrawal calculator. See how compound growth works with the compound interest calculator.