Traditional vs Roth IRA Calculator
Compare the after-tax retirement value of a Traditional IRA versus a Roth IRA for the same yearly contribution.
Independently verified for accuracy
Calculator by Toolsloft ↗- Traditional IRA after tax
- 515755.89
- Roth IRA after tax
- 502531.38
- Difference
- 13224.51
- Better account
- Traditional
This calculator compares the after-tax value of saving the same pre-tax amount each year in a Traditional IRA versus a Roth IRA. A Traditional IRA defers tax until withdrawal, while a Roth IRA is funded with money you have already paid tax on. Enter your contribution, time horizon, expected return, and tax rates to see which account leaves you with more spendable money in retirement.
How this is calculated
The model assumes the same pre-tax contribution each year. A Traditional IRA goes in untaxed and is taxed at your retirement rate when you withdraw, so its after-tax value is the grown balance reduced by the retirement tax rate. A Roth IRA is funded after current tax, so the same pre-tax dollars buy a smaller contribution that then grows tax-free. Both balances grow at the same annual return using a future-value-of-an-annuity factor with end-of-year contributions, and the after-tax results are compared. It does not model income limits, employer matches, or required distributions, so treat it as a planning estimate.
How to use
- Enter the yearly contribution you plan to make and the number of years you will save.
- Enter your expected annual return as a percentage.
- Enter your current tax rate and the tax rate you expect in retirement.
- Read the after-tax balance for each account and which one comes out ahead.
Examples
- $7,000/yr, 30 yr, 7%, 24% now vs 22% later:
Traditional wins by $13,224.51 - Equal rates: $6,000/yr, 20 yr, 6%, 22% now and later:
About equal at $172,156.57
FAQ
- When does a Roth IRA beat a Traditional IRA?
- A Roth tends to win when your tax rate in retirement is higher than your tax rate today, because you lock in the lower rate by paying tax up front. When your retirement rate is lower than your current rate, the Traditional IRA usually comes out ahead. When the two rates are equal, the after-tax results match.
- What tax rates should I enter?
- Use your marginal tax rate, meaning the rate on your next dollar of income, for both fields. Enter your current marginal rate for the current rate and your best estimate of your marginal rate in retirement for the retirement rate.