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Roth IRA vs. Traditional IRA Calculator

Compare after-tax retirement values of Roth and Traditional IRA contributions based on current and projected tax brackets, with 2026 IRS contribution limits and income phase-outs.

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A 7% annual return reflects historical stock market averages after inflation.

Tax Rates

If you expect a lower tax bracket in retirement, Traditional IRA may win. If you expect the same or higher bracket, Roth IRA typically wins. State tax applies to both current and retirement periods.

IRA Comparison

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Enter your details and click compare.

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What This Calculator Does

This Roth IRA vs. Traditional IRA calculator compares the after-tax value of both account types at retirement. A Roth IRA is funded with after-tax dollars (no upfront deduction) but grows and is withdrawn completely tax-free. A Traditional IRA is funded with pre-tax dollars (tax deduction now) but withdrawals are taxed as ordinary income in retirement. The decision between them hinges on whether your tax rate is higher now or in retirement. For 2026, the IRA contribution limit is $7,500 (under age 50) or $8,500 (age 50+). Roth IRA eligibility phases out at MAGI of $153,000 for single filers and $242,000 for married filing jointly.

The Formula

Roth After-Tax Value = Contribution x (1 + Return)^Years | Traditional After-Tax Value = Contribution x (1 + Return)^Years x (1 - Retirement Tax Rate)

Both accounts grow at the same rate. The Roth IRA balance is fully yours because taxes were paid upfront. The Traditional IRA balance must be reduced by retirement taxes on withdrawal. If your current and retirement tax rates are identical, the after-tax outcomes are mathematically equal. Roth wins when retirement taxes will be higher; Traditional wins when retirement taxes will be lower.

Step-by-Step Example

1

Enter contribution and timeline

Annual contribution: $7,500. Current age: 30. Retirement age: 65. Investment period: 35 years.

2

Set return assumption

Expected annual return: 7% (historical inflation-adjusted stock market average).

3

Enter tax rates

Current combined rate (federal + state): 27%. Expected retirement combined rate: 17%.

4

Compare results

Both accounts grow to ~$1,067,000. Roth after-tax: $1,067,000 (100% yours). Traditional after-tax: $885,610 (17% tax on withdrawal). Traditional wins by ~$181,390 because the retirement rate is lower.

Real-World Use Cases

Early Career Planning

Young professionals in low tax brackets often benefit from Roth contributions because they pay low taxes now and avoid higher taxes in peak earning years.

Pre-Retirement Optimization

Workers within 10 years of retirement can compare their current bracket to their estimated retirement bracket to make the optimal choice for remaining contribution years.

Tax Diversification Strategy

Splitting contributions between Roth and Traditional creates tax flexibility in retirement, allowing you to manage taxable income year by year.

Common Mistakes to Avoid

  • Only comparing current tax rates without considering future rate changes. Tax laws change. Having both Roth and Traditional accounts provides a hedge against uncertainty.

  • Ignoring state taxes. Moving from a high-tax state (California, New York) to a no-tax state (Florida, Texas) in retirement can significantly favor Traditional contributions.

  • Not accounting for Required Minimum Distributions (RMDs). Traditional IRAs require withdrawals starting at age 73 (2026 rules), which may push you into a higher bracket. Roth IRAs have no RMDs.

  • Assuming Roth is always better for young people. If you are in the 22%+ bracket now and expect to be in the 12% bracket in retirement, Traditional may still win.

  • Exceeding income limits for Roth contributions. In 2026, single filers with MAGI above $153,000 face reduced limits. Above $168,000, direct Roth contributions are not allowed. Consider a backdoor Roth strategy.

Frequently Asked Questions

Accuracy and Disclaimer

This comparison uses simplified tax assumptions and constant rates. Actual tax outcomes depend on your full financial picture, filing status, deductions, state taxes, and future tax law changes. Roth IRA income limits and Traditional IRA deductibility rules depend on your specific situation. Consult a tax advisor for personalized guidance.

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