Roth vs. Traditional IRA Calculator
The most important retirement decision you'll make. See which account type puts more money in your pocket at retirement based on your specific tax situation.
Your Retirement Details
2024 IRA contribution limit: $7,000/year ($8,000 if age 50+). 401(k) limit: $23,000/year.
Traditional IRA wins by
$41,416
Because paying taxes now at 22% beats paying 18% on a much larger balance in retirement
Roth Balance at Retirement
$807,607
100% tax-free
Traditional (After Tax)
$849,023
After 18% withdrawal tax
Traditional (Pre-Tax)
$1,035,394
Before withdrawal taxes
Annual Tax Savings (Trad)
$1,540
Upfront tax deduction
After-Tax Balance Growth Over Time
- Roth IRA (Tax-Free)
- Traditional IRA (After Tax)
Roth vs. Traditional: The Tax Timing Decision
The choice between a Roth and Traditional IRA comes down to a single question: will your tax rate be higher now or in retirement? If you expect to be in a higher tax bracket in retirement, pay taxes now with a Roth. If you expect to be in a lower bracket, defer taxes with a Traditional IRA.
A Roth IRA is funded with after-tax dollars — you pay taxes on the money before contributing. But the growth is completely tax-free, and qualified withdrawals in retirement are tax-free. This is extraordinarily powerful over long time horizons because you're not paying taxes on decades of compound growth.
A Traditional IRA is funded with pre-tax dollars (if you qualify for the deduction), reducing your taxable income today. The money grows tax-deferred, and you pay ordinary income tax on withdrawals in retirement. This is beneficial if you're in a high tax bracket now and expect to be in a lower one in retirement.
For most people in their 20s and 30s who are in the 22% bracket or below, the Roth IRA is the better choice. The tax-free growth over 30–40 years is simply too powerful to pass up. As you progress in your career and enter higher brackets (32%+), the Traditional IRA's upfront deduction becomes more valuable.
One important note: Roth IRAs have income limits ($161,000 for single filers in 2024). High earners can use the "backdoor Roth" strategy to contribute regardless of income.
Roth IRA vs. Traditional IRA: Pros & Cons
Pros
- ✓Tax-free growth and withdrawals
- ✓No required minimum distributions (RMDs)
- ✓Contributions (not earnings) can be withdrawn anytime
- ✓Best if tax rates rise in the future
- ✓Great for young/lower-income earners
Cons
- ✗No upfront tax deduction
- ✗Income limits ($161k single, $240k married in 2024)
- ✗After-tax contributions reduce current cash flow
- ✗Less beneficial if in high bracket now
Pros
- ✓Upfront tax deduction reduces current tax bill
- ✓Higher effective contribution (same $ goes further)
- ✓Best if in high tax bracket now
- ✓No income limits for contributions (deductibility varies)
Cons
- ✗Taxed on all withdrawals in retirement
- ✗Required minimum distributions at age 73
- ✗Potential for higher taxes if rates rise
- ✗Less flexibility for early withdrawals