Roth vs Traditional IRA Calculator United States

This Roth vs Traditional IRA calculator compares the after-tax retirement value of the same yearly contribution, with the Traditional tax saving reinvested.

Annual contribution US$

Years until retirement years

Expected annual return %

Your tax rate now %

Expected tax rate in retirement %

Roth IRA (after tax) —

Traditional IRA (after tax) —

Roth advantage —

We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.

What it does

The Roth vs Traditional IRA Calculator compares the after-tax retirement value of putting the same amount each year into a Roth IRA — where withdrawals are tax-free — versus a Traditional IRA, where you deduct the contribution now, pay tax on withdrawals later, and reinvest the upfront tax saving.

Data sources & parameters

This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.

The formula

Roth = contribution x annuity factor; Traditional = contribution x annuity x (1 - retirement rate) + (contribution x tax rate now) x annuity, where the annuity factor is ((1+return)^years - 1) / return

How it works

It grows both accounts at your chosen return for the number of years you set. The Roth balance is already after tax. The Traditional balance is taxed at your expected retirement rate, and the tax you saved up front is grown in a taxable-deferred side fund so the comparison is fair.

Where it is used

Deciding whether to fund a Roth or Traditional IRA this year
Seeing how a lower expected tax rate in retirement favours the Traditional route
Testing how the choice shifts if you actually invest the Traditional tax refund

Worked example

Paying $7,000.00 a year for 30 years at 7% grows to … after tax in a Roth. The Traditional route, reinvesting the upfront tax saving, reaches … — a Roth advantage of ….

Choosing between a Roth and a Traditional IRA comes down to whether you pay tax on the money now or later. This Roth vs Traditional IRA calculator projects the same yearly contribution to retirement in both accounts at a return you choose, taxes the Traditional withdrawals at the rate you expect in retirement, and reinvests the upfront tax saving from the Traditional deduction, so the two are compared on equal terms.

How the two accounts are taxed

With a Roth IRA, you contribute money you have already paid income tax on. It grows untouched, and qualified distributions in retirement are tax-free, contributions and growth alike. With a Traditional IRA, you typically deduct the contribution from your taxable income in the year you make it, so the government effectively pays part of the deposit. The money grows tax-deferred, but every withdrawal in retirement is taxed as ordinary income.

A Roth balance is already after tax and a Traditional balance is not, so the two ending numbers cannot be compared directly. A million dollars in a Roth is a million dollars to spend; a million in a Traditional account might be worth seven or eight hundred thousand after income tax. The calculator applies your expected retirement tax rate to the whole Traditional balance before reporting it.

Why the tax saving matters

Put the same amount into either account and the Traditional route gives you an immediate tax saving equal to the contribution multiplied by your current marginal rate. Someone contributing $7,000 at a 24 percent rate frees up $1,680 they would otherwise have paid in tax. If that money is spent, the Traditional route has invested less than the Roth. The calculator assumes you invest the saving each year in a side fund that grows at the same return, and adds that fund to the Traditional total without further tax.

On that basis, if your tax rate is the same now and in retirement, the two accounts finish tied. The Roth pulls ahead when your retirement rate is higher than today's, and the Traditional route wins when your retirement rate is lower.

A worked example

Suppose you contribute $7,000 a year for 30 years and earn a 7 percent annual return. The future-value annuity factor for those inputs is about 94.46, so each account's contributions grow to roughly $661,225 before any retirement tax.

The Roth is worth $661,225, all yours. For the Traditional account, apply a 22 percent retirement tax rate and you are left with about $515,756. The upfront saving, 7,000 times 24 percent, or $1,680 a year, grows to roughly $158,694 in the side fund. Adding that gives a Traditional total near $674,450, about $13,000 ahead of the Roth, because the assumed retirement rate (22 percent) is lower than today's rate (24 percent).

If your current rate were 12 percent instead of 24, the upfront saving would shrink, the side fund would grow to only about $79,347, and the Traditional total would fall to roughly $595,103, leaving the Roth ahead by more than $66,000. Only today's tax rate changed, and the result reversed.

Which one to pick

Model your own expectations. If you are early in your career and expect your income and tax rate to rise, the Roth is often the stronger long-term choice, and it has two advantages this projection does not price in: qualified withdrawals do not add to your taxable income in retirement, and a Roth IRA has no required minimum distributions during your lifetime. If you earn a lot now and expect a lower rate in retirement, the Traditional deduction may serve you better, as long as you invest the tax saving instead of spending it. Many people split contributions between both to hedge against an uncertain future.

Assumptions and limitations

This is a planning estimate, not tax advice. It assumes a constant annual contribution, one steady rate of return, and flat tax rates now and in retirement, though real rates vary from year to year. It adds the side fund to the Traditional total at its full grown value, which is a simplification: in practice a taxable brokerage account is taxed along the way and on sale, which would narrow the Traditional result. It does not model the annual IRS contribution limit, income-based phase-outs, catch-up contributions, early-withdrawal penalties, required minimum distributions, employer plans such as a 401(k), or state income tax. Every rate you enter is your own assumption, so revisit the numbers as your income and the tax code change, and consult a qualified advisor before making a final decision.

About This Roth vs Traditional IRA Calculator

Use this Roth vs Traditional IRA calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.

Frequently asked questions

What is the difference between a Roth and a Traditional IRA?

A Roth IRA is funded with money you have already paid tax on, and qualified withdrawals in retirement are completely tax-free. A Traditional IRA is usually funded with pre-tax money that lowers your taxable income now, but every dollar you withdraw later is taxed as ordinary income. The trade-off is paying tax now versus paying tax in retirement.

Is a Roth or Traditional IRA better for me?

It mostly comes down to whether your tax rate today is higher or lower than the rate you expect in retirement. If you expect a lower rate later, the Traditional deduction tends to win. If you expect the same or a higher rate, or you value tax-free withdrawals and no required distributions, the Roth usually comes out ahead. This calculator lets you test both rates directly.

Why does the calculator add a side fund to the Traditional IRA?

For a fair comparison, both routes must invest the same out-of-pocket amount. A Traditional contribution gives you an immediate tax deduction, freeing up cash equal to the contribution times your current tax rate. The calculator assumes you reinvest that saving in a side fund that grows at the same return, so the Traditional side does not get extra spending money the Roth never had.

How much can I contribute to an IRA?

The IRS sets an annual contribution limit that can change each year and is reduced or phased out at higher incomes, with an extra catch-up amount once you reach age 50. Because the exact figure changes, this tool lets you enter your own annual contribution instead of assuming a fixed limit. Check the current IRS limit before you contribute.

Does this calculator account for early withdrawal penalties?

No. It models steady contributions held until retirement and does not include the early-withdrawal penalty, required minimum distributions, employer plans, or state taxes. It is a planning estimate to compare the two account types, not tax advice for a specific situation.

About the author

Written and reviewed by

Taha Kheirandish

Economics student and independent researcher

Taha Kheirandish reads tax codes the way other people read maps — to find out where a system actually leads, not where it claims to go.

He is an economics student, and his work here is comparative by design. A pension deferral bonus in Quebec, a commuting allowance in Germany, a rent-increase ceiling in the Netherlands: each is a decision a government made about how money should move, and each reads differently once you set it beside eight others. He builds and checks these calculators across nine markets from primary sources — the regulation rather than a summary of it, the ministry’s own circular rather than a news item quoting it.

That is the editorial standard of the site as well as his habit. Every rate, threshold and bracket here carries the document it was read from and the date it takes effect, and gets re-checked when the law moves rather than when someone happens to notice.

He is a researcher, not a licensed adviser, and nothing on this site is personal financial advice. It is arithmetic done carefully with its sources shown — so that you can check it, and take it to someone who is.

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