What is the Roth vs Traditional IRA?
The choice is fundamentally a bet on tax rates. A Roth is funded after tax and withdrawn tax-free; a traditional is deducted now and taxed on withdrawal. If rates were identical in both periods, the two would produce exactly the same result.
This calculator assumes the traditional's upfront tax saving is itself invested in a taxable account — the only fair comparison, since otherwise you are simply contributing more to the Roth.
Formula & worked example
Traditional net = Balance × (1 − retirement rate) + tax savings invested separately
Worked example: $7,000 a year from 30 to 65 at 7%. Both reach about $1.04 million pre-tax. The Roth keeps all of it. The traditional owes tax on withdrawal but the invested deduction partly compensates, landing at about $1.019 million. Here the Roth edges ahead by roughly $16,600 — the retirement rate is close enough to today's that tax-free growth wins.
How to use this roth vs traditional ira calculator
- Enter the same contribution for both to keep it fair.
- Set your current marginal rate — the rate on your top dollar of income.
- Estimate your retirement rate; most retirees drop one bracket, but not all.
- The winner is shown with the dollar difference.
Smart tips
- If you cannot decide, split contributions between both — it hedges against future tax law changes.
- Roth wins on flexibility: no RMDs, contributions withdrawable anytime, and tax-free inheritance.
- Young earners in low brackets usually favour Roth, since their tax rate will likely rise.
- High earners in peak years often favour traditional to capture the deduction at the highest rate.
- Tax rates are set by future legislation, not by you — diversifying across both account types manages that risk.
Frequently asked questions
Is a Roth or traditional IRA better?
Roth if your tax rate will be higher in retirement; traditional if lower. If rates are equal, the two produce identical results mathematically.
Can I contribute to both?
Yes, but the combined annual limit of $7,500 applies across both accounts, not to each separately.
What if I do not know my future tax rate?
Split contributions between both. Tax diversification is a reasonable hedge against uncertainty.
Does the Roth have other advantages?
Yes — no required minimum distributions, contributions withdrawable penalty-free at any time, and tax-free inheritance for heirs.
Want the theory behind the numbers? Read our retirement guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: IRS — IRA contribution limits, IRS — required minimum distributions: ages and the uniform lifetime table. How we check these numbers.