Roth vs. Traditional Calculator

The Roth vs. traditional decision comes down to one question: is your tax rate higher now, or will it be higher in retirement? Traditional contributions save tax today and are taxed when withdrawn. Roth contributions are taxed today and withdrawn tax-free. This calculator shows the difference in dollars.

A worked example

Suppose you set aside $7,000 of pre-tax income a year for 30 years, earning 7%, with a 22% tax rate today.

• Traditional: the full $7,000 is invested each year and grows to about $661,226. If your retirement tax rate is 12%, you keep about $581,878 after tax.
• Roth: you pay 22% tax first, so $5,460 is invested each year. It grows to about $515,756, all tax-free.

Here, traditional wins by about $66,000, because the tax rate in retirement is lower. If your retirement rate were 24% instead, the traditional account would be worth about $502,531 after tax, and the Roth would win. When the two rates are equal, the results are identical. The math is symmetric.

Things the simple comparison misses

• Contribution limits. For 2026, the IRA limit is $7,500 and the 401(k) employee limit is $24,500, per the IRS. Because Roth dollars are after-tax, a maxed-out Roth effectively shelters more money than a maxed-out traditional account.
• Required minimum distributions. Traditional accounts require withdrawals starting in your 70s. Roth IRAs don't require them for the original owner.
• Tax diversification. Having both types lets you choose which to withdraw from each year to manage your tax bracket in retirement.
• Heirs. Inherited Roth accounts are generally tax-free to beneficiaries, while inherited traditional accounts are taxed as income. See our step-up in basis guide for how other assets are treated.
• Income limits. Direct Roth IRA contributions phase out at higher incomes. Roth 401(k)s don't have that limit.
• Future tax law. Nobody knows future tax rates. Many people split contributions to hedge.

A rough rule of thumb

Early in your career, in a low bracket, Roth often makes sense. In your peak earning years, in a high bracket, traditional often wins. The deciding factor is always the comparison between your rate now and your likely rate in retirement. Enter your own numbers above.