Roth vs Traditional Calculator
Which retirement account leaves you more after tax.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Roth after-tax value
- $442,743.26
- Traditional after-tax value
- $363,049.48
- Traditional plus invested tax saving
- $453,369.10
- Better choice
- Traditional
- Difference
- $10,625.84
- Tax saved today with traditional
- $42,000.00
Quick answer
A Roth contribution is taxed now and withdrawn tax-free; a traditional contribution is deducted now and taxed on withdrawal. Traditional comes out ahead when your tax rate in retirement is lower than today's; Roth wins when it is higher. Contributing $7,000 a year for 25 years at 7%, a 24% rate today and 18% later favors traditional by about $10,600, provided you invest the tax saving.
What the Roth vs Traditional calculator does
This calculator compares the after-tax value at retirement of putting the same dollar amount into a Roth account or a traditional (pre-tax) account each year. It works for IRAs, 401(k)s, 403(b)s and other plans that offer both versions, because the tax logic is the same.
It shows three figures: the Roth balance (already tax-free), the traditional balance after paying your retirement tax rate, and the traditional balance plus the upfront tax saving invested in a regular taxable account. The third figure is the fair comparison — if you choose traditional and spend the tax saving, Roth usually wins.
The key input is your guess at your tax rate in retirement, which nobody knows for sure. Run a few rates to see how sensitive the answer is, and use the 401(k) calculator or retirement savings calculator to estimate what your balance will need to support.
The formula
FV = C × ((1 + r)ⁿ − 1) ÷ r Roth = FV Traditional = FV × (1 − t_ret) Traditional + side fund = FV × (1 − t_ret) + (C × t_now) × ((1 + r)ⁿ − 1) ÷ r × (1 − 0.15)
| Symbol | Meaning | Unit |
|---|---|---|
| C | Annual contribution, invested at the end of each year | $ |
| r | Expected annual investment return | decimal |
| n | Years until retirement | years |
| t_now | Marginal tax rate today — the rate a deduction would save | % |
| t_ret | Expected tax rate on withdrawals in retirement | % |
| 0.15 | Flat tax the calculator applies to the side fund's ending value, approximating capital gains tax | — |
The comparison is the standard after-tax future-value analysis used in financial planning textbooks. If both tax rates are equal and the tax saving is not invested, Roth and traditional produce identical results. Because the side fund sits in a taxable account, Roth gains a small edge when rates are equal. The model ignores income limits on Roth IRA contributions, required minimum distributions, employer matches (always pre-tax) and state taxes. It applies to traditional vs Roth IRA decisions as well as 401(k)s.
Worked examples
Mid-career saver expecting a lower rate later
$7,000 a year for 25 years at 7%, in the 24% bracket today and expecting about 18% in retirement.
Inputs
- Annual contribution7000 $
- Years until retirement25
- Expected annual return7 %
- Tax rate today24 %
- Tax rate in retirement18 %
Result
- Roth after-tax value$442,743.26
- Traditional after-tax value$363,049.48
- Traditional plus invested tax saving$453,369.10
- Better choiceTraditional
- Difference$10,625.84
- Tax saved today with traditional$42,000.00
Traditional plus the invested tax saving comes to about $453,400, around $10,600 more than the Roth's $442,700. The edge only holds if the yearly $1,680 tax saving is actually invested.
Early-career worker in a low bracket
A 30-year-old in the 12% bracket putting $7,000 a year into an IRA for 35 years at 7%, expecting a 22% rate in retirement.
Inputs
- Annual contribution7000 $
- Years until retirement35
- Expected annual return7 %
- Tax rate today12 %
- Tax rate in retirement22 %
Result
- Roth after-tax value$967,658.15
- Traditional after-tax value$754,773.36
- Traditional plus invested tax saving$853,474.49
- Better choiceRoth
- Difference$114,183.66
- Tax saved today with traditional$29,400.00
Roth wins by about $114,000. Paying tax at 12% now to avoid 22% later is the classic case for Roth contributions early in a career.
High earner maxing a 401(k)
$23,500 a year (the 2025 employee 401(k) limit) for 20 years at 6%, in the 32% bracket now and expecting 22% later.
Inputs
- Annual contribution23500 $
- Years until retirement20
- Expected annual return6 %
- Tax rate today32 %
- Tax rate in retirement22 %
Result
- Roth after-tax value$864,461.39
- Traditional after-tax value$674,279.89
- Traditional plus invested tax saving$909,413.39
- Better choiceTraditional
- Difference$44,951.99
- Tax saved today with traditional$150,400.00
Traditional comes out about $45,000 ahead. A 10-point drop in tax rate between now and retirement is a strong argument for pre-tax contributions.
Which account usually wins
The decision comes down to the tax rate you avoid now versus the rate you expect to pay on withdrawals.
| Your situation | Usually favors | Why |
|---|---|---|
| Low bracket now (10–12%), early career | Roth | Tax paid now is cheap and income is likely to rise |
| Peak earning years, 32% bracket or higher | Traditional | Deduction saves a lot; retirement income is often lower |
| Expect similar rates now and later | Roth, slightly | More money sheltered from tax, no required distributions on Roth IRAs |
| Planning to retire in a no-income-tax state | Traditional | State tax saved now, none paid later |
| Large pension or rental income in retirement | Roth | Withdrawals stack on top of other income at higher rates |
Choosing your retirement tax rate
Use the rate you expect to pay on the withdrawals, not your current bracket. Start with expected retirement income — Social Security, pensions, rental income and planned withdrawals — then see which bracket that lands in under today's rules. Remember that up to 85% of Social Security benefits can be taxable, which can push withdrawals into a higher bracket than expected.
If you genuinely do not know, splitting contributions between Roth and traditional (tax diversification) gives you flexibility to choose which account to draw from each year.
Non-tax differences between the accounts
- Access: Roth IRA contributions (not earnings) can be withdrawn at any time without tax or penalty.
- Required minimum distributions: Roth IRAs have none for the original owner, and since 2024 Roth 401(k)s do not either. Traditional accounts require withdrawals starting at the RMD age — see the RMD calculator.
- Income limits: direct Roth IRA contributions phase out at higher incomes; Roth 401(k) contributions have no income limit.
- Heirs: inherited Roth money is generally tax-free to beneficiaries, while inherited traditional money is taxed as they withdraw it.
How to use the Roth vs Traditional Calculator
- 1Enter the amount you plan to contribute each year — the same dollar figure is used for both accounts.
- 2Enter years until retirement and an expected average return (5–7% is a common long-run assumption for a stock-heavy mix).
- 3Enter your marginal federal tax rate today; add your state rate if you pay state income tax.
- 4Enter your best estimate of the rate you will pay on withdrawals, then compare the Roth figure with 'Traditional plus invested tax saving'.
Frequently asked questions
Is Roth or traditional better if my tax rate stays the same?
They are nearly equal. If you invest the traditional tax saving in a taxable account, Roth comes out slightly ahead because more of your money grows tax-free.
Can I contribute to both a Roth and a traditional account?
Yes, but the annual limit is shared. For 2025 the combined IRA limit is $7,000 ($8,000 at age 50 or older), and the 401(k) employee limit of $23,500 covers both Roth and pre-tax deferrals.
Are employer matching contributions Roth or traditional?
Matches have traditionally been pre-tax regardless of your choice. Recent law allows plans to offer Roth matches, but the employee is then taxed on the match in the year it is made.
Should I convert my traditional IRA to a Roth?
A conversion makes sense when the tax you pay now is at a lower rate than you expect later, often in low-income years such as early retirement. The converted amount is added to taxable income for the year, so it can push you into a higher bracket.
Why does the calculator invest the tax saving?
A $7,000 traditional contribution costs you less than $7,000 after tax. Investing that difference makes the two choices cost the same out of pocket, which is the only fair comparison.
References
- Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) — Internal Revenue Service
- Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) — Internal Revenue Service
- Retirement Topics – Designated Roth Account — Internal Revenue Service
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
- Report an error