Roth vs Traditional IRA Calculator

What the Roth vs Traditional IRA Calculator does

Traditional IRA contributions may be tax-deductible now but withdrawals are taxed later; Roth contributions are made after tax but qualified withdrawals are tax-free. For the same out-of-pocket cost, the better choice depends on whether your tax rate is higher now or in retirement.

Formula

• Roth after-tax value = contributions grown at the return (tax-free)
• Traditional: contribute the pre-tax equivalent = amount ÷ (1 − tax rate now)
• Traditional after-tax value = grown balance × (1 − retirement tax rate)

Worked example

Using the starting values in the calculator above:

How to read the result

If you expect the same tax rate now and later, the two come out equal. The decision is a bet on future tax rates.

Contribution limits apply to the account, not to after-tax cost, so a full Roth contribution shelters more money than a full Traditional one.

Limits to keep in mind

• Assumes the Traditional contribution is fully deductible and ignores income limits for Roth eligibility.

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