Roth vs. Traditional IRA Calculator: Which Keeps More?

Disclaimer: This calculator is provided for educational and estimation purposes only and does not constitute formal financial advice.

What this calculator actually answers

The Roth-versus-Traditional question is the most argued one in retirement planning, and most of the arguing is noise. The two accounts do not differ in what they invest in, how often they compound, or what they earn — a Roth IRA and a Traditional IRA holding the same fund grow at the same rate. They differ in exactly one way: when the tax is paid. Traditional takes the tax break today and taxes the withdrawal later; Roth taxes the contribution today and lets the withdrawal come out clean. Everything else is the same math wearing different clothes.

That means the decision reduces to a single comparison between two numbers you can actually estimate: the marginal tax rate you pay on the contribution now, and the marginal rate you will pay on the withdrawal at retirement. This calculator makes that comparison concrete — it runs the same out-of-pocket cost through both accounts, to retirement, and reports which one leaves more money spendable and by how much.

The one equation that decides it

Both accounts fund monthly at the same assumed nominal return. Let $C$ be the annual pre-tax budget, $r$ the annual return, $y$ the years until retirement, $t_{now}$ today’s marginal rate, and $t_{retire}$ the rate at withdrawal. The annuity factor for monthly contributions is:

$$F(r,y) = \frac{(1 + r/12)^{12y} - 1}{r/12}$$

The Traditional contribution is made pre-tax, so the full $C$ goes in and the balance is taxed once at the end:

$$FV_{trad} = \frac{C}{12} \times F(r,y), \qquad FV_{trad}^{spendable} = FV_{trad} \times (1 - t_{retire})$$

The Roth contribution is made with after-tax dollars, so the same $C$ of income buys only $C \times (1 - t_{now})$ inside the account — and then nothing more is ever taken out:

$$FV_{roth} = \frac{C \times (1 - t_{now})}{12} \times F(r,y)$$

Because multiplication commutes, the two spendable results are exactly equal whenever the two tax rates are equal:

$$\frac{C}{12} \times F(r,y) \times (1 - t_{retire}) = \frac{C \times (1 - t_{now})}{12} \times F(r,y) \quad \Longleftrightarrow \quad t_{now} = t_{retire}$$

That identity is the whole debate in one line. If you pay the same rate on the way in and the way out, the order does not matter — the tax break today and the tax bill later are the same fraction of the same balance. The compound interest calculator shows the underlying growth both accounts share; the decision here is purely which side of the tax line the growth lands on.

The defaults prove the identity

Run the defaults and the calculator demonstrates the identity itself: a 30-year-old with a $7,500 pre-tax budget, a 22% rate now and 22% in retirement, and a 7% return for 35 years. The Traditional account grows to $1,125,659 before tax, pays $247,645 at withdrawal, and leaves $878,014 spendable. The Roth account receives $5,850 a year — $7,500 minus the 22% — grows tax-free, and lands on the same $878,014.

The symmetry is not coincidence. The $1,650 a year the Traditional keeps out of today’s taxes — $57,750 over the full 35 years — is exactly the tax deferral the IRS reclaims on the other side, growth included. The two accounts are the same deal facing different directions. This is why the common advice “Roth is always better because withdrawals are tax-free” is wrong: tax-free withdrawals are the price of paying today’s rate, and if today’s rate equals tomorrow’s, the price is exactly the benefit.

When the rates differ, the winner flips

Hold the current rate at 22% and vary the retirement rate. The Roth balance never changes — it was taxed up front — so every move in the gap comes from the Traditional side:

Now flip it: hold the retirement rate at 22% and vary today’s rate. The Traditional balance never changes, and every move comes from the Roth side:

The asymmetry between the two tables is the real lesson. When the retirement rate rises, it is the Traditional that loses — its entire balance, every dollar of growth included, gets taxed at the higher rate. When today’s rate rises, it is the Roth that loses, because its funding shrinks before a single dollar compounds. A modest expected rise — say 22% now and 25% in retirement — already favors Roth by $33,770. A high earner at the 37% bracket today who expects 22% in retirement loses $168,849 by choosing Roth: $709,165 versus $878,014. The bigger the gap between the rates, the bigger the stakes on either side.

The return dial moves both sides equally

Because both accounts earn the same rate, the return never decides the winner — it decides the size of the prize. At the default rates, all three returns below land on a tie; they just tie at different altitudes:

This is worth internalizing before you worry about which account to open: the account choice is a tax bet, not an investing bet. Two people with the same rates and different returns are not disagreeing about Roth versus Traditional — they are disagreeing about how much compounding will reward them either way. The FIRE calculator is the place to work out whether the resulting balance is enough; this page only decides which tax wrapper grows it.

The contribution-limit reality

The model compares pre-tax budgets, which is the honest way to compare accounts that cost different amounts today. The IRS limit, by contrast, counts dollars that actually land in the account — in 2026, $7,500, or $8,600 from age 50. Because a Roth dollar is already-taxed, the limit lets you put more pre-tax income to work:

The “$8,600” row is the one that shows how the limits interact: a 50-year-old maxing the $8,600 limit into a Roth puts $8,600 of after-tax dollars in the account, which corresponds to an $8,600 / (1 − 0.22) = $11,026 pre-tax budget. Maxing either account is a fine position to be in — the limit is the constraint you apply after the rate comparison picks the winner, not a reason to skip the comparison.

Where the assumptions break

The comparison is exact about the mechanics it models and silent about the rest. The honest list:

• One rate at each end. Real tax rates move across a career and across retirement. The 22% figure is a single marginal rate; a withdrawal schedule that fills the standard deduction first is taxed at effective rates below the marginal number.
• The standard deduction and other income. Social Security, a pension, and 401(k) withdrawals all fill brackets alongside IRA money. The 401(k) calculator projects that other income; the rate you enter here should be the marginal rate on top of it.
• Roth rules the math does not model. Qualified withdrawals require age 59½ and a five-year clock; Traditional withdrawals face required minimum distributions from age 73. Roth contribution eligibility phases out for high earners — in 2026, beginning at $153,000 of modified AGI for single filers — which is precisely when the Traditional side of the ledger usually wins the rate comparison anyway.
• State tax. Both rates here are the combined federal and state marginal rates, but the state tax treatment of retirement withdrawals varies by state; the calculator applies one blended rate to everything.
• A static return. One nominal return for the whole horizon, no sequence-of-returns risk. As the return table shows, the rate is the size of the pot, never the winner of the contest.

None of these change the decision rule — compare the rate you pay now with the rate you expect to pay later. They change how carefully you estimate those two numbers, which is the real work of this calculator.

How to use this calculator

• Current age and retirement age set the years of compounding. The same $7,500 budget starting at 40 leaves $394,910 at 65 instead of $878,014 — the account choice matters less than the decades.
• Annual contribution is the pre-tax budget, not the IRS limit. Enter what you can actually set aside; use the limit rows above to convert between “budget” and “account dollars.”
• Current tax rate is the marginal rate on the dollars being contributed — your bracket plus state tax, not your effective rate.
• Retirement tax rate is the marginal rate you expect on the top of your retirement income. If you are unsure, run a range: this is a bet on a number, and the chart shows how wide the gap swings.
• Expected return should be net of fees, and it should be the same for both accounts — it is. The 7% default matches the 401(k) calculator’s convention.

The currency selector changes symbols only — figures are not converted by an exchange rate. The comparison itself is a tax argument, and it holds in any currency that has a pre-tax retirement account.

The decision this page settles is deliberately narrow: which account type keeps more of your money. It does not tell you how much you need — that is the FIRE calculator’s question — or what your employer will match — the 401(k) calculator’s. Run the rates you actually expect on both sides, and let the identity do the rest: equal rates, a wash; higher rates later, Roth; higher rates now, Traditional. Everything else is the same math wearing different clothes.