Roth vs. Traditional IRA Calculator
The Roth vs. Traditional question comes down to one thing: your tax rate today versus your tax rate in retirement. Enter both and see which account actually leaves you more spendable money - including what happens if you invest the Traditional IRA's tax savings instead of spending them.
Your Situation
The 2026 IRA limit is $7,500 ($7,000 in 2025), plus $1,000 catch-up if 50+
The long-term stock market average is around 7-10% before inflation
Tax Rates
The rate on your last dollar of income today
Your expected effective rate on withdrawals
After-Tax Money in Retirement
The Breakdown
Rules of Thumb
- • Early career, lower bracket? Roth - pay tax while your rate is cheap
- • Peak earning years, high bracket? Traditional usually wins the deduction game
- • Unsure where rates are headed? Split contributions between both - tax diversification is real
- • The comparison is only honest if the Traditional tax savings get invested, not absorbed into spending
- • Roth has no required minimum distributions - a quiet but valuable estate-planning perk
How the Two Accounts Actually Differ
Same Engine, Different Tax Timing
Both IRAs invest identically and grow tax-free along the way. The only structural difference is when the IRS takes its cut. Traditional: deduct now, pay income tax on every withdrawal later. Roth: pay tax now, withdraw everything - contributions and decades of growth - tax-free.
That's why the whole decision reduces to comparing tax rates. If your rate is the same in both periods, the math is a wash - it's just multiplication, and the order doesn't matter. Traditional wins when today's rate is higher than retirement's; Roth wins when it's lower. Everything else is refinement.
The Refund Question Most Comparisons Skip
A $7,000 Traditional contribution at a 24% marginal rate puts $1,680 back in your pocket at tax time. The textbook comparison assumes you invest that refund; in real life, most people absorb it into spending. If the refund evaporates, the Roth effectively forces you to save more - its $7,000 is worth more than the Traditional's $7,000 because the tax is already paid.
The checkbox in this calculator lets you model yourself honestly. Diligent refund-investor? Traditional often edges ahead when your current bracket is high. Refund-spender? Roth wins by more than the tax-rate math alone suggests.
Beyond the Math
Reasons Roth Punches Above Its Numbers
- • No required minimum distributions - the money compounds untouched as long as you like, and passes to heirs tax-free
- • Contributions (not earnings) can be withdrawn anytime without penalty, a built-in flexibility valve
- • Tax-free withdrawals don't count toward the income that determines how much of your Social Security is taxed or your Medicare premiums
- • It hedges against the possibility that tax rates are broadly higher decades from now
Reasons Traditional Deserves More Credit
- • Most people's income - and bracket - drops in retirement, which is the Traditional-favoring scenario
- • You deduct at your top marginal rate but withdraw across all the brackets, starting from the bottom - the effective rate on withdrawals is usually lower than it looks
- • The deduction can lower your AGI enough to unlock other credits and benefits today
Income Limits and the Backdoor
Roth IRA contributions phase out at higher incomes, and the Traditional IRA deduction phases out if a workplace plan covers you - the exact thresholds adjust annually, so check the IRS figures for the current year. High earners locked out of direct Roth contributions often use the "backdoor Roth": contribute to a non-deductible Traditional IRA, then convert it. It's legal and common, but existing pre-tax IRA balances complicate the taxes, so read up or ask a professional first.
When You Don't Have to Choose
The contribution limit is shared across both account types, but nothing stops you from splitting it - and if you have a workplace 401(k), that's a separate limit entirely. Many savers pair a Traditional 401(k) (deduction at their highest bracket) with a Roth IRA (tax-free bucket for later), getting both benefits at once. Our 401(k) Calculator covers the workplace side.
Keep Exploring
More on retirement accounts and long-term investing:
- • Read the full guide: Roth IRA vs. Traditional IRA: Which One Should You Choose?
- • Project your full retirement picture with the Retirement Calculator
- • Model employer matching with the 401(k) Calculator
- • Compare all your options: Complete Guide to Investment Accounts
Frequently Asked Questions
What's the difference between a Roth and Traditional IRA?
Tax timing. Traditional IRA contributions are typically tax-deductible now, and withdrawals in retirement are taxed as income. Roth contributions are made with after-tax money, and qualified withdrawals - including all the growth - are completely tax-free. Both grow tax-free while invested.
Which is better, Roth or Traditional?
Whichever side of your tax-rate comparison wins. If your tax rate today is higher than it will be in retirement, Traditional wins; if it's lower, Roth wins; if they're equal, it's nearly a tie. Early-career savers in low brackets usually favor Roth; peak earners in high brackets usually favor Traditional - and splitting between both hedges the uncertainty.
How much can I contribute to an IRA?
The limit is $7,500 for 2026 ($7,000 in 2025), plus a $1,000 catch-up contribution if you're 50 or older. The limit is shared across all your IRAs - you can split it between Roth and Traditional however you like, but the combined total can't exceed the cap. A workplace 401(k) has its own, much higher limit.
Are there income limits for a Roth IRA?
Yes - the ability to contribute directly phases out at higher incomes, with thresholds that adjust each year (check the IRS site for current figures). Above the limit, many people use the backdoor Roth: contribute to a non-deductible Traditional IRA and convert it. Traditional IRA deductibility also phases out if a workplace plan covers you.
Can I contribute to both a Roth and Traditional IRA?
Yes, as long as your combined contributions stay under the annual limit. Splitting builds "tax diversification" - a taxable bucket and a tax-free bucket you can draw from strategically in retirement to manage your bracket year by year.
When can I withdraw from each account?
Both allow penalty-free withdrawals of earnings starting at age 59½ (Roth also requires the account be open five years). Roth contributions - the money you put in - can come out anytime, tax and penalty free. Early withdrawals of earnings from either account generally cost a 10% penalty plus any tax due, with limited exceptions.
Do IRAs have required minimum distributions?
Traditional IRAs do - the IRS forces taxable withdrawals starting in your seventies whether you need the money or not. Roth IRAs have no RMDs during your lifetime, so the money can keep compounding tax-free indefinitely and pass to heirs, which makes Roth dollars especially valuable late in life.
How do I estimate my retirement tax rate?
Estimate your retirement income - portfolio withdrawals, Social Security, pensions - and look at where it lands in today's brackets, using your effective rate rather than the top marginal one. Most retirees land below their peak-career rate. If you expect substantial income or believe tax rates will rise broadly, nudge the number up and see if the verdict changes.