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Roth vs Traditional IRA Calculator

Compare Roth vs Traditional outcomes by modeling current tax savings, future tax rates, and growth over time.

Results

Traditional after-tax at retirement
$20,601
Roth value at retirement
$25,751
Current tax savings (Traditional)
$1,320
Current tax rate
22.00%
Expected retirement tax rate
20.00%

How to use this calculator

  1. Enter contribution amount and your current marginal tax rate.
  2. Enter the tax rate you expect in retirement (can be higher/lower).
  3. Enter years to grow and expected annual return.
  4. Review after-tax values for Roth vs Traditional and the current tax savings of the Traditional route.

Inputs explained

Current tax rate
Your marginal rate now; drives the Traditional deduction value.
Future tax rate
Your expected marginal rate in retirement; drives taxation of Traditional withdrawals.
Years/return
Time horizon and growth assumption for both accounts.

How it works

Traditional: you get a current-year tax benefit (contribution × current tax rate). The future balance grows tax-deferred, then is reduced by future tax rate.

Roth: no upfront deduction, but future balance is tax-free. We grow contributions at the expected return for the same period.

Outputs show after-tax value for both paths and the current tax savings from Traditional.

Formula

Traditional after-tax = (Contribution × (1+Return)^Years) × (1 − Future tax rate)
Roth after-tax = Contribution × (1+Return)^Years
Current tax savings (Traditional) = Contribution × Current tax rate

When to use it

  • Deciding between Roth vs Traditional contributions for this year.
  • Testing scenarios where your future tax rate is higher or lower than today.
  • Quantifying the current-year tax benefit of Traditional contributions.

Tips & cautions

  • If you expect a higher tax rate later, Roth often wins; if lower later, Traditional may be better.
  • Use marginal rates, not effective, for accurate comparisons.
  • Revisit annually as your income and tax outlook change.
  • Ignores contribution limits/phaseouts, employer plans, and catch-up rules.
  • Does not model RMDs for Traditional or Roth conversions.
  • Assumes constant tax rates and returns; real life varies.

Worked examples

$6,000 contribution, 22% current, 20% future, 25 years, 6% return

  • Traditional after-tax ≈ $20,601
  • Roth ≈ $25,751
  • Tax savings now ≈ $1,320

$6,500 contribution, 24% current, 15% future, 20 years, 7% return

  • Traditional after-tax is higher when future rate < current
  • Roth wins if future rate > current; compare both scenarios

Deep dive

This Roth vs Traditional calculator compares current tax savings against future after-tax value to help you choose which contribution type may be better.

Use it to test different future tax rate scenarios and see the tax trade-offs clearly.

FAQs

Which is better?
Depends on current vs future tax rates. If future is lower, Traditional often wins; if higher, Roth often wins.
Are contribution limits modeled?
No. This focuses on tax effect per dollar contributed.
RMDs or conversions?
Not modeled. Traditional RMDs and Roth conversions can change outcomes.
Employer match?
Not included; matches generally go to pre-tax/Traditional buckets.
State taxes?
Not included; use adjusted tax rates if state tax differs now vs retirement location.

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For illustration only. Tax rules, limits, and future rates vary. Consult a tax/financial professional for personalized advice.