Roth vs. Traditional IRA Calculator

• Compares after-tax spendable value, not account balances. A $500,000 traditional balance is not $500,000 of spending.
• Invests the traditional tax saving in a taxable side account, so both scenarios cost the same out of pocket.
• Reports the break-even retirement tax rate — the number that actually decides the answer.
• Checks your Roth eligibility against the published income phase-out range for the tax year.

The actual difference between the two

Both accounts shelter investment growth from annual taxation. The difference is when you pay income tax on the money.

• Traditional. Contributions are deductible now, so you pay no tax on the money going in. The account grows untaxed. Withdrawals in retirement are taxed as ordinary income — the whole withdrawal, contributions and growth alike.
• Roth. Contributions are made with money you have already paid tax on. The account grows untaxed. Qualified withdrawals in retirement are entirely tax-free.

There is a mathematical result here that surprises people: if your tax rate is the same when you contribute and when you withdraw, the two produce exactly the same after-tax result. Not approximately — exactly.

Traditional: C × (1 + r)^n × (1 − t)
Roth:        C × (1 − t) × (1 + r)^n

Multiplication is commutative, so these are identical.

Everything else in the comparison is a departure from that base case: a different rate now than later, contribution limits that are effectively larger for Roth, what you do with the deduction, and rules that apply to one and not the other.

The step most comparisons get wrong

Contributing $7,500 to a traditional IRA at a 24% marginal rate costs you $5,700 out of pocket, because $1,800 comes back as a reduced tax bill. Contributing $7,500 to a Roth costs the full $7,500.

Most calculators compare $7,500 in each account and conclude that Roth wins, having quietly compared a larger sacrifice against a smaller one. That is not a comparison of the accounts; it is a comparison of contribution amounts.

This calculator handles it correctly. With the "invest the traditional tax saving" option on — the default — the $1,800 annual saving goes into a taxable side account, growing at the same return less the tax drag you specify, with capital gains tax applied at the end. Both scenarios now cost the same, and the comparison is real.

Switch the option off and you model the more realistic behaviour for many people: the refund gets spent. That is a legitimate scenario, and it is why Roth often wins in practice even where traditional wins on paper. The calculator says so explicitly rather than pretending it is a mathematical result.

The break-even rate

Your results include a break-even retirement tax rate: the rate at which the two options produce identical after-tax value. Above it, Roth wins. Below it, traditional wins.

This reframes the decision usefully. Instead of asking "which is better?", ask "do I think my retirement rate will be above or below this number?" That is a question you can reason about.

Arguments that your retirement rate could be higher than today's:

• You are early in your career and earning less now than you will later.
• You expect substantial retirement income from pensions, rental property or a large traditional balance whose required distributions will be sizeable.
• You think tax rates in general will rise. Current individual rates were extended by legislation, but nothing prevents future changes.

Arguments that it could be lower:

• You are at peak earnings now and will spend less in retirement than you earn today.
• You expect to retire in a state with no income tax, or to have low-income years between retiring and claiming Social Security — years that are also good Roth conversion opportunities.

Nobody knows the answer, which is a strong argument for holding some of each. Tax diversification lets you choose which account to draw from each year in retirement, and that flexibility has real value — particularly for managing the thresholds that affect how much of your Social Security is taxable and what you pay for Medicare.

The considerations that are not in the formula

Roth limits are effectively larger. The contribution cap is the same dollar figure for both, but a Roth dollar is an after-tax dollar. Maximising a Roth therefore shelters more real value than maximising a traditional account at the same nominal limit — which matters if you are contributing the maximum.

Required minimum distributions. Traditional accounts require withdrawals to begin at a specified age, whether or not you need the money, and those withdrawals are taxable income that can push you into a higher bracket and affect other thresholds. Roth IRAs have no such requirement for the original owner.

Social Security taxation and Medicare premiums. How much of your Social Security is taxable, and what you pay for Medicare Part B and D, both depend on income thresholds. Traditional withdrawals count towards those; qualified Roth withdrawals do not. For some retirees this interaction is worth more than the headline rate difference.

Estate considerations. Inherited traditional accounts carry the income tax liability to the beneficiary; inherited Roth accounts generally do not. Distribution rules for inherited accounts have changed in recent years and are worth advice.

Access rules. Roth IRA contributions — though not earnings — can generally be withdrawn at any time without tax or penalty, since tax has already been paid. That is not a reason to treat a Roth as a savings account, but it is a genuine difference in flexibility. Both accounts have early-withdrawal rules and five-year requirements worth understanding before relying on them.

Employer matching is always pre-tax. Regardless of whether you contribute to a Roth or traditional 401(k), matching contributions have traditionally gone into a pre-tax account, though rules now permit Roth matching in some plans. Check how your plan handles it.

Contribution limits and income phase-outs

For tax year 2026, the IRA contribution limit is $7,500, rising to $8,600 from age 50 with the catch-up. That limit is per person across all IRAs combined, not per account.

Roth IRA contributions phase out with modified adjusted gross income: for 2026 the range is $153,000–$168,000 for single and head of household filers, and $242,000–$252,000 for married filing jointly. Above the top of the range, a direct Roth IRA contribution is not permitted. Enter your MAGI under Advanced and the calculator checks this and tells you the limit that applies.

Two things worth knowing if you are above the range. First, a Roth 401(k) has no income limit at all — if your employer offers one, that route stays open regardless of income. Second, there are other approaches that involve after-tax contributions and conversions; they have specific rules and pitfalls, particularly where you hold other pre-tax IRA balances, and they are worth discussing with a tax professional rather than attempting from a calculator.

Workplace plan limits are much higher: $24,500 of elective deferral for 2026, plus an $8,000 catch-up from age 50 and a larger catch-up in the 60–63 age band. Those limits, and all the others, live in the site's central tax data file so they can be updated for a new year without touching any calculation code.

Common mistakes

Comparing account balances instead of after-tax value. A $500,000 traditional balance at a 22% retirement rate is $390,000 of spending. A $500,000 Roth balance is $500,000.

Ignoring what happens to the deduction. If you invest it, traditional catches up. If you spend it, it does not. Be honest with yourself about which you would do.

Assuming your retirement rate will be lower. It is the conventional assumption and it is often right, but not for everyone — particularly someone with a large traditional balance, a pension and Social Security arriving together.

Skipping the employer match to fund an IRA. The match is an immediate return that dwarfs any Roth-versus-traditional difference. Capture it first.

Treating this as a permanent decision. You can change your contribution mix every year. Contributing to both over a career is a perfectly reasonable response to genuine uncertainty about future rates.

Frequently asked questions