IRA Calculator: Traditional vs Roth

The only question an IRA comparison really asks

A traditional IRA taxes you at the exit; a Roth taxes you at the entrance. Everything else, the investments, the compounding, the contribution limits, is identical. So the comparison collapses to one question: is your tax rate higher now, or will it be higher in retirement? If the rates are equal, the two accounts land on exactly the same after-tax dollar, and this calculator will show you a tie. That is not a simplification; it is the arithmetic of multiplication being commutative, and it is the most useful fact in this entire section.

The worked example: $7,000 a year for 30 years at 7%

Save the current under-50 limit of $7,000 a year (the 50-plus catch-up limit is $8,000) for 30 years at a 7% annual return, on top of a $25,000 starting balance set aside for the moment, and the new contributions alone grow to $661,226: $210,000 of contributions and $451,226 of growth. Now run the fork. In a traditional IRA, the whole $661,226 is taxable on withdrawal; at a 22% retirement bracket you keep $515,756. In a Roth, each $7,000 contribution is what remains after paying 22% today, so $5,460 a year actually goes in, and it grows to $515,756, withdrawn tax-free. The same number, to the dollar. The tie is the lesson.

Move one bracket and the tie breaks. Retire into the 12% bracket instead and the traditional account keeps 88 cents of every dollar while the Roth still paid 22 cents going in: traditional wins by about $66,123 on this example. Expect a higher bracket later, because of RMDs stacking on Social Security, a pension, or a planned Roth conversion ladder, and the Roth wins by the symmetric margin. Early-career savers in the 10% or 12% bracket are buying tax-free growth at the cheapest rate they will ever be offered.

Where the simple model stops

Three real-world wrinkles bend the result. First, the contribution limit is the same nominal number for both accounts, so a maxed-out Roth shelters more after-tax value than a maxed-out traditional account; the pre-tax-equal comparison above understates the Roth at the limit. Second, traditional balances carry an RMD obligation from your seventies onward (see the RMD calculator), while Roth IRAs never do during your life, which is a genuine Roth advantage for estate and bracket management. Third, the traditional deduction is worth less than it looks if it phases out because you or your spouse has a workplace plan at higher incomes; the Roth has its own income limits for direct contributions. Our Roth vs traditional guide covers the eligibility rules, and the conversion calculator prices the third path: traditional now, convert in the low-income gap years before RMDs begin.

Mechanics that bend the tie: limits, catch-ups, and spouses

The annual limit is per person, not per account, and it counts every IRA you own together: $7,000 under 50, $8,000 from 50, for 2026. A non-working spouse can still fund an IRA from the working spouse's income (the spousal IRA rule), which doubles a couple's sheltered room and is chronically underused in the years one partner is home with children. Contributions require earned income, and the window runs to the tax-filing deadline in April of the following year, so a February contribution can still be designated for the prior year, a small but real second chance the calendar offers every spring.

The backdoor Roth, and its tripwire

Above the Roth income limits, the standard route is a nondeductible traditional contribution followed by a conversion, the so-called backdoor Roth. It works exactly as advertised for someone whose only traditional IRA money is the new contribution. It misfires under the pro-rata rule for anyone with a large pre-tax IRA balance: the conversion is taxed in proportion to all pre-tax money across all your IRAs, not just the fresh contribution. A $93,000 pre-tax balance turns a $7,000 backdoor contribution into a mostly taxable event. The standard defusing step is rolling the pre-tax IRA into a current employer's 401(k) first, which removes it from the pro-rata base. This is the single most expensive paragraph of fine print in individual retirement accounts.

Getting money out: the 5-year rules

Roth contributions (not earnings) can be withdrawn at any age, tax- and penalty-free, because the tax was prepaid. Earnings follow two clocks: the account's 5-year rule, counted from your first Roth funding, and the age 59½ rule. Conversions carry their own 5-year clock per conversion for the penalty when withdrawn early by someone under 59½. Traditional withdrawals are simpler and harsher: ordinary income on everything beyond any nondeductible basis, plus a 10% penalty before 59½ with a list of exceptions (disability, first home up to $10,000, higher-education expenses, substantially equal periodic payments). Retiring at 55 opens a separate door for the 401(k) of the employer you just left, the rule of 55, which has no IRA equivalent and is a real argument for not rolling that plan over immediately.

Employer plans change the deduction, not the comparison

If you or your spouse is covered by a workplace plan, the traditional IRA deduction phases out at higher incomes, which can quietly convert a "traditional" contribution into a nondeductible one, the worst of both treatments if left unconverted, since the earnings still come out as ordinary income. The Roth comparison in this calculator assumes a deductible traditional contribution; if yours would not be deductible, the Roth (or a prompt conversion of the nondeductible contribution) wins at almost any bracket, and the tie described above never forms. The eligibility tables live in the IRA guide; the headline is that workplace coverage is a reason to check, not a reason to skip the year.