Roth vs Traditional Calculator
Pay tax now or pay tax later? Compare the after-tax value of both retirement accounts at your tax rates and see which one wins.
Last updated: October 2026
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How the comparison works
| Roth | Traditional | |
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| Enter your details and click Compare. | ||
The core trade-off
Both accounts grow your investments identically. The only difference is when you pay tax. With a Traditional account, contributions are pre-tax: you deduct them now, the money compounds, and you pay income tax on withdrawals in retirement. With a Roth, you contribute after-tax dollars (no deduction now), the money compounds, and qualified withdrawals are completely tax-free.
So the question is never about investment returns. It is a bet on tax rates: is your marginal rate higher now, or will it be higher in retirement?
How the math works: equal out of pocket
A fair comparison holds your out-of-pocket cost equal. If you can put $7,000 of pre-tax income toward retirement, the Traditional account invests the full $7,000, while the Roth invests $7,000 minus this year's tax on it. Both balances then grow at the same assumed return for the same number of years.
The future value of yearly contributions uses the ordinary annuity formula:
where PMT is the annual contribution, r the annual return, and n the years until retirement. The Traditional balance is then reduced by the retirement tax rate; the Roth balance is already yours in full.
Worked example
Age 30 to 65 (35 years), $7,000/year contribution, 7% annual return, 22% tax now, 18% tax in retirement.
The annuity factor is 138.237, so $7,000 a year grows to $967,658 pre-tax. Traditional: the full $967,658 is taxed at 18% on withdrawal ($174,178 in tax), leaving $793,480 after tax. Roth: you pay 22% on each $7,000 up front ($1,540 a year, $53,900 total over 35 years in nominal dollars), invest the remaining $5,460 a year, and it grows tax-free to $754,773. Traditional wins by $38,706, because the 18% retirement rate is lower than the 22% current rate.
Flip the retirement rate to 25% and rerun it: the Roth wins, because now you would rather pay 22% today than 25% later. That flip is the entire decision.
The crossover rule
With equal out-of-pocket contributions, the math collapses to one comparison: Roth wins when your retirement tax rate exceeds your current rate; Traditional wins when your current rate is higher. If the rates are equal, both accounts produce exactly the same after-tax result.
In practice, most people face lower rates in retirement (less income, no payroll tax on withdrawals), which favors Traditional during peak earning years. But Roth has extras the math above does not price: no required minimum distributions, tax-free money for large one-time expenses in retirement, and a hedge against future tax increases.
401(k) matches and Roth conversions
Two things sit outside the comparison. First, always capture your full employer 401(k) match before optimizing anything: it is an instant 50 to 100% return that dwarfs the Roth-vs-Traditional difference. Note that employer match dollars always go into the pre-tax side, even inside a Roth 401(k). Second, a Roth conversion (paying tax now to move Traditional money into Roth) makes sense in unusually low-income years, early retirement gaps before Social Security, or any year your rate dips well below your expected retirement rate.
Roth vs Traditional FAQs
What is the main difference between Roth and Traditional?
Timing of the tax break. Traditional contributions are pre-tax (deducted now) and withdrawals are taxed later. Roth contributions are after-tax (no deduction now) and qualified withdrawals are tax-free.
What if my tax rate stays the same in retirement?
Then it is a tie. With equal out-of-pocket contributions and identical rates now and in retirement, both accounts produce exactly the same after-tax result. The choice only matters when the rates differ.
Should young people always choose Roth?
Often, but not automatically. Young earners usually face lower current rates, which favors Roth, but a young high earner in a peak bracket can still come out ahead with Traditional. Your actual rates decide, so run them above.
What about my employer's 401(k) match?
Contribute enough to capture the full match before optimizing anything else: it is an instant 50 to 100% return. Employer match dollars go into the pre-tax side even inside a Roth 401(k).
Can I contribute to both Roth and Traditional?
Yes. For IRAs, the annual limit applies across both types combined, not per account. Many people split contributions to hedge against unknowable future tax rates, which is a perfectly reasonable strategy.
Are there income limits?
Yes. Direct Roth IRA contributions phase out above certain incomes (the exact thresholds adjust yearly), and Traditional deductibility phases out if you are covered by a workplace plan. High earners often use the "backdoor Roth" route; check current IRS figures for your year.
What is a Roth conversion, and when does it make sense?
Paying income tax now to move Traditional money into a Roth. It makes sense in low-income years when your current rate is unusually low, such as early retirement gaps before Social Security begins.
What are required minimum distributions?
Traditional accounts force withdrawals starting at a certain age (currently 73 to 75 depending on birth year), taxed as income. Roth IRAs have no lifetime RMDs for the owner, which is a real planning advantage the raw math does not capture.
Does state tax matter in this decision?
Yes, especially if you might move. Contributing Traditional while in a high-tax state and withdrawing in a no-income-tax state is a double win; the reverse (Roth now, move to a high-tax state later) favors Roth. Include state rates in your estimates.
What if I retire early?
Early retirement often creates low-income years before pensions and Social Security start, which are ideal for Roth conversions at low rates. Many early retirees contribute Traditional during working years and convert strategically in the gap.