Choosing between a Roth IRA and a Traditional IRA (or 401k) is one of the most impactful retirement planning decisions you will make. The right choice depends on your current tax rate versus your expected retirement tax rate. This free calculator compares both options side by side, showing after-tax retirement values, the break-even tax rate, and year-by-year growth so you can make an informed decision.
Your Details
IRA max: $7,000 / 401k max: $23,500
Your tax bracket today
Expected tax bracket in retirement
Historical average for diversified index funds: ~7% real
Traditional IRA
Tax-deferred growth, taxed on withdrawal
Roth IRA
Taxed now, tax-free growth and withdrawal
Year-by-Year Growth Comparison
| Year | Traditional (Pre-Tax) | Traditional (After-Tax) | Roth (Tax-Free) |
|---|
Break-Even Analysis
How to Use the Roth vs Traditional IRA Calculator
The choice between a Roth IRA and a Traditional IRA (or their 401k counterparts) can mean tens of thousands of dollars difference in your retirement savings. The core question is simple: is it better to pay taxes now at your current rate, or defer taxes and pay them later at your retirement rate? This calculator answers that question with precise numbers tailored to your situation.
Step 1: Enter Your Annual Contribution
Start by entering how much you plan to contribute each year. For IRA accounts, the current annual limit is $7,000 (or $8,000 if you are 50 or older). For 401(k) accounts, the limit is $23,500. The calculator works the same way for both account types — just enter your planned annual contribution amount.
Step 2: Set Your Current Tax Rate
Enter your current marginal tax rate — this is the rate at which your last dollar of income is taxed. For Traditional contributions, this determines the immediate tax savings you receive. For Roth contributions, this determines how much of each dollar actually gets invested after paying taxes upfront. Common federal rates range from 12% to 37%, though most working professionals fall in the 22-32% range.
Step 3: Estimate Your Retirement Tax Rate
This is the most important — and most uncertain — input. Your retirement tax rate depends on how much income you will draw in retirement, future tax legislation, and what state you live in. If you expect to have less income in retirement, your rate may be lower. If you have large Traditional IRA balances subject to Required Minimum Distributions, your rate could be higher than expected.
Step 4: Set Years and Return Rate
Enter how many years until you retire and your expected annual investment return. More years means more compounding, which amplifies the difference between Roth and Traditional outcomes. A historically reasonable return for a diversified stock portfolio is 7% per year in real (inflation-adjusted) terms. Try different return rates to see how market performance affects the comparison.
Step 5: Read the Results
The calculator shows a side-by-side comparison of both accounts: total contributed, pre-tax growth, taxes owed, and the final after-tax value you can actually spend in retirement. The winner declaration tells you which option comes out ahead and by how much. The break-even tax rate shows the exact retirement tax rate where both options produce identical outcomes — if your actual retirement rate is above this, Roth wins; if below, Traditional wins.
Step 6: Review the Year-by-Year Growth
The growth comparison table shows how both accounts build wealth over time. Traditional accounts show larger pre-tax balances because the full contribution grows untaxed, but the after-tax column reveals the amount you can actually keep. Roth accounts show smaller balances that are entirely yours tax-free. All calculations run privately in your browser — nothing is stored or transmitted to any server.
For a detailed walkthrough, see our guide: Roth Conversion Ladder for Early Retirement.
FAQ
Is this Roth vs Traditional IRA calculator free?
Yes, this calculator is completely free with no signup, no account, and no hidden fees. All calculations run entirely in your browser. You can compare unlimited scenarios without sharing any personal financial data.
Is my financial data safe and private?
Absolutely. Everything runs locally in your web browser — your income, tax rates, and contribution amounts are never sent to any server. You can even disconnect from the internet after loading the page and the calculator will continue working.
What is the difference between a Roth and Traditional IRA?
With a Traditional IRA, you contribute pre-tax dollars and pay income tax when you withdraw in retirement. With a Roth IRA, you contribute after-tax dollars but all withdrawals in retirement are completely tax-free, including all investment gains. The best choice depends on whether your tax rate will be higher or lower in retirement.
Does this calculator work for 401(k) comparisons too?
Yes. The math behind Roth vs Traditional is identical whether you are comparing IRA or 401(k) accounts. The key inputs — contribution amount, current tax rate, retirement tax rate, and expected return — apply to both account types. Just enter your annual contribution amount regardless of account type.
What is the break-even tax rate?
The break-even tax rate is the retirement tax rate at which Roth and Traditional accounts produce exactly the same after-tax outcome. If your actual retirement tax rate is above the break-even, Roth wins. If it is below, Traditional wins. This calculator finds the exact break-even point for your specific inputs.
Should I choose Roth or Traditional?
If you expect your tax rate to be higher in retirement than it is today, Roth is usually better because you pay the lower rate now. If you expect a lower rate in retirement, Traditional lets you defer taxes until you are in a lower bracket. This calculator shows you the exact dollar difference for your situation.
What annual return rate should I use?
A commonly cited long-term average for a diversified stock index fund portfolio is 7% per year in real terms, adjusted for inflation. If you want to be conservative, use 5-6%. The calculator lets you set any rate so you can model different market scenarios and see how they affect the Roth vs Traditional comparison.
Does this account for Required Minimum Distributions?
This calculator focuses on the core tax comparison between Roth and Traditional accounts. It does not model RMDs, which apply to Traditional accounts starting at age 73. RMDs can force you into higher tax brackets in retirement, which is an additional advantage of Roth accounts not captured in this simplified comparison.