Roth vs. Traditional IRA Calculator

Roth vs. Traditional net spendable comparison
Item	Value
Roth IRA	$832,534
Traditional IRA	$832,534

How to use this tool

Enter ages and contribution. Input your current age, target retirement age, and the annual IRA contribution amount.
Set tax rates. Enter your current marginal tax rate (today) and your expected marginal tax rate in retirement.
Set return assumption. Enter the expected annual investment return. A common assumption is 6–8% for a diversified portfolio.
Compare outcomes. See the projected after-tax balance for each account, the tax owed at withdrawal, your out-of-pocket cost, and a recommendation based on the tax rate comparison.

The key question: when do you pay tax?

Both Roth and Traditional IRAs offer tax-advantaged growth; you pay no tax on dividends, interest, or capital gains inside the account. The difference is when you pay income tax: now (Roth) or later (Traditional).

Traditional IRA: tax-deferred growth

Contributions may be fully deductible (reducing taxable income today), and every dollar of withdrawals in retirement is taxed as ordinary income. The upfront deduction is worth your current marginal rate (at 22%, a $7,000 contribution saves you $1,540 in taxes this year).

Roth IRA: tax-free growth

Contributions are made with after-tax dollars (no deduction), but qualified withdrawals, including all growth, are 100% tax-free. There are also no required minimum distributions (RMDs) from a Roth IRA during the owner's lifetime, making it a useful estate planning tool.

The math: when are they equivalent?

If your tax rate is the same now and in retirement, Roth and Traditional produce identical after-tax results. The calculation is:

Roth net = C × (1 − t_now) × (1 + r)^n

Traditional net = C × (1 + r)^n × (1 − t_retire)

When t_now = t_retire, the two expressions are identical. When t_retire > t_now, Roth wins; when t_retire < t_now, Traditional wins.

Rules of thumb

Choose Roth if you are early in your career (lower current income), expect income to grow substantially, or believe tax rates will rise. Choose Traditional if you are at peak earnings and expect a lower income in retirement. When uncertain, splitting contributions between both accounts hedges the risk.

Contribution limits (2025)

Account	Under 50	Age 50+ (catch-up)
IRA (Traditional or Roth)	$7,000	$8,000
401(k) / 403(b)	$23,500	$31,000

Roth IRA contributions phase out at higher incomes. For 2025: Single filers phase out between $150,000–$165,000; Married Filing Jointly between $236,000–$246,000. Above the upper limit, direct Roth IRA contributions are not allowed.

Backdoor Roth IRA

High earners above the Roth IRA income limits can still access Roth benefits through the backdoor Roth strategy: make a non-deductible Traditional IRA contribution (no income limit applies), then immediately convert it to a Roth IRA. The conversion is tax-free if you have no other pre-tax IRA balances.

The pro-rata rule is the key complication: if you have existing pre-tax IRA money (in any Traditional, SEP, or SIMPLE IRA), the IRS treats all your IRAs as one pool when calculating the taxable portion of the conversion. For example, if you have $90,000 in a pre-tax IRA and contribute $10,000 non-deductible, only 10% of any conversion is tax-free. Consult a tax professional if this applies to you.

Frequently asked questions

What is the core difference between a Roth and Traditional IRA?

A Traditional IRA uses pre-tax contributions: you deduct them from income today and pay income tax on withdrawals in retirement. A Roth IRA uses after-tax contributions: no deduction now, but qualified withdrawals in retirement are completely tax-free - including all the growth.

Which is better - Roth or Traditional?

It depends entirely on tax rates. If your tax rate in retirement will be higher than it is today, Roth wins. If it will be lower, Traditional wins. If rates are the same, the two are mathematically equivalent. Younger workers with lower current incomes often benefit more from Roth; high earners approaching peak income often prefer Traditional.

What are the 2025 IRA contribution limits?

For 2025, the annual IRA contribution limit is $7,000. Workers age 50 and older can contribute up to $8,000 (the extra $1,000 is the catch-up contribution). The limit applies to the combined total across all your IRAs.

Are there income limits for IRA contributions?

Roth IRA eligibility phases out at higher incomes ($150,000–$165,000 for single filers in 2025; $236,000–$246,000 for married filing jointly). Traditional IRA deductibility also phases out if you or your spouse have a workplace retirement plan. This calculator models the tax math and does not check income eligibility.

Can I have both a Roth and a Traditional IRA?

Yes, but your combined contributions to all IRAs cannot exceed the annual limit ($7,000 / $8,000). Many investors split contributions - for example, $3,500 to a Traditional and $3,500 to a Roth - to hedge against future tax rate uncertainty.