Roth vs Traditional IRA Calculator
Roth and Traditional retirement accounts are taxed at opposite ends. Roth contributions are made with after-tax money and grow tax-free; Traditional contributions are pre-tax but are taxed on withdrawal. The better choice hinges on one question: will your tax rate be higher now or in retirement?
How this calculator works
Both accounts grow the same contribution the same way, compounded monthly into a future value FV. The difference is when tax is applied:
- Roth: contributions are already taxed, so the full balance is yours to spend —
spendable = FV. - Traditional: withdrawals are taxed at your future rate —
spendable = FV × (1 − retirement tax rate).
Traditional also gives an upfront tax break: the income tax you avoid today on each contribution. We show the total of that saving so you can weigh it — ideally you’d invest it too.
The simple rule of thumb
If your tax rate will be lower in retirement, Traditional usually wins (you defer tax to a cheaper time). If it will be higher, or you value tax-free flexibility, Roth tends to win. When rates are equal, the spendable amounts match — the choice then comes down to flexibility and tax diversification.
Learn more
- Roth vs Traditional: Which Retirement Account Wins? — Pay tax now or later? Understand how Roth and Traditional accounts differ, and the simple question that decides which is better for you.
- Investing Basics: How to Start Growing Your Money — A jargon-free primer on why investing beats saving alone, what compound growth really does, and the simple, low-cost way most people get started.
Frequently asked questions
- Which is better, Roth or Traditional?
- It depends on your tax rate now versus in retirement. Lower future rate favors Traditional; higher future rate favors Roth. Many people split contributions across both to hedge against an uncertain future.
- What about the upfront tax savings of Traditional?
- Contributing pre-tax lowers this year's tax bill. If you invest those savings rather than spend them, Traditional becomes more competitive. The calculator shows the total upfront saving so you can factor it in.
- Does this include contribution limits or RMDs?
- No. It's a tax-treatment comparison and ignores annual contribution limits, required minimum distributions on Traditional accounts, and income eligibility rules for Roth IRAs. Treat it as a directional guide, not a full plan.