Roth vs Traditional IRA Calculator

Both Roth and Traditional IRAs are individual retirement accounts that provide tax advantages for long-term savings, but they differ in when the tax benefit occurs. A Traditional IRA allows you to contribute pre-tax dollars (subject to income and participation rules), reducing your taxable income in the year of contribution. The money grows tax-deferred and you pay ordinary income taxes only when you withdraw funds in retirement. Required Minimum Distributions (RMDs) begin at age 73.

A Roth IRA works the opposite way. Contributions are made with after-tax dollars — there is no upfront deduction. However, the money grows completely tax-free, and qualified withdrawals in retirement are 100% tax-free. Roth IRAs also have no RMDs during the original owner's lifetime, making them excellent vehicles for estate planning and for those who expect their tax rate to be higher in retirement than it is today.

The core decision rule is simple: if you expect your tax rate to be higher in retirement than it is now, a Roth IRA is generally better. If you expect your tax rate to be lower in retirement, a Traditional IRA typically wins. The challenge is that predicting future tax rates requires assumptions about income growth, future tax law changes, and retirement income sources. This calculator helps you see the projected after-tax outcome under both approaches using your specific inputs, and shows you the break-even retirement tax rate.

1. Enter your planned annual contribution amount (up to the IRS annual limit).
2. Enter the number of years until you plan to retire.
3. Enter your current marginal federal tax rate — this is used to model the Traditional IRA's upfront deduction benefit.
4. Enter your expected tax rate in retirement — this is used to calculate the Traditional IRA's future withdrawal tax cost.
5. Enter your expected average annual investment return.
6. Enter your current age to see context-aware projections.
7. Review the winner, the after-tax values for both accounts, and the break-even tax rate.

• Consider Roth in lower-income years: Early career years, years with business losses, or years taking time off work are ideal windows to contribute to a Roth IRA or do a Roth conversion at a lower tax cost.
• Diversify tax exposure: Contributing to both Roth and Traditional accounts in different years gives you flexibility to draw from the most tax-efficient source in retirement based on prevailing tax law.
• Use Roth conversions strategically: In years when your income is temporarily lower, consider converting a portion of Traditional IRA funds to Roth, filling up lower tax brackets at a lower cost.
• Roth accounts and estate planning: Roth IRAs have no RMDs and pass tax-free to heirs, making them valuable estate planning tools for those who do not need to draw down all retirement assets during their lifetime.
• Backdoor Roth IRA: High-income earners above the Roth contribution limits can make non-deductible Traditional IRA contributions and immediately convert them to Roth — consult a tax professional for proper execution.
• Watch IRS contribution limits: The annual IRA contribution limit for 2025 is $7,000, plus a $1,000 catch-up contribution if you are age 50 or older.