Traditional vs Roth IRA Calculator
Compare Traditional and Roth IRA to find the best retirement strategy. Analyze tax implications, growth projections, and break-even tax rates for your situation.
Personal & Retirement Info
Contribution & Tax Details
2024-2025 limit: $7,000 base + $1,000 catch-up (age 50+)
Historical stock market average: ~7-10%. Conservative: 5-6%.
Federal marginal rate based on income bracket.
Guess your future federal marginal rate. Often lower than current.
Applied to both current deduction and future withdrawals.
Time to Retirement
30 years
Current Age:35
Retirement Age:65
Traditional IRA Analysis
Tax Savings Now:$1890.00
Net Cost Now:$5110.00
Future Value:$53286
Tax at Withdrawal:$10657
Net After Tax:$42629
Effective Growth:734%
Deduct contributions now (save tax), pay tax on full amount at withdrawal.
Roth IRA Analysis
Tax Cost Now:$1890.00
Net Cost Now:$8890.00
Future Value:$53286
Tax at Withdrawal:$0
Net After Tax:$53286
Effective Growth:499%
Pay tax now (no deduction), withdraw 100% tax-free in retirement.
Comparison Result
Roth IRA Wins
Roth advantage: $10,657
Roth IRA recommended - Tax-free withdrawals provide significant advantage
Tax Rate Scenarios
Same Tax Rate
Trad: $38899
Roth: $53286
Roth +$14387
Lower Tax Rate
Trad: $42629
Roth: $53286
Roth +$10657
Higher Tax Rate
Trad: $36234
Roth: $53286
Roth +$17051
Growth Over Time (Year by Year)
| Year | Trad Before Tax | Trad After Tax | Roth | Roth Advantage |
|---|---|---|---|---|
| 1 | $7490 | $5992 | $7490 | $1498 |
| 2 | $8014 | $6411 | $8014 | $1603 |
| 3 | $8575 | $6860 | $8575 | $1715 |
| 4 | $9176 | $7340 | $9176 | $1835 |
| 5 | $9818 | $7854 | $9818 | $1964 |
| 6 | $10505 | $8404 | $10505 | $2101 |
| 7 | $11240 | $8992 | $11240 | $2248 |
| 8 | $12027 | $9622 | $12027 | $2405 |
| 9 | $12869 | $10295 | $12869 | $2574 |
| 10 | $13770 | $11016 | $13770 | $2754 |
| 11 | $14734 | $11787 | $14734 | $2947 |
| 12 | $15765 | $12612 | $15765 | $3153 |
| 13 | $16869 | $13495 | $16869 | $3374 |
| 14 | $18050 | $14440 | $18050 | $3610 |
| 15 | $19313 | $15451 | $19313 | $3863 |
Traditional IRA Pros & Cons
Pros
- Tax deduction now reduces current tax bill
- May reduce AGI for other benefits (student loan, etc.)
- Better if expect lower taxes in retirement
- Can convert to Roth later (backdoor strategy)
Cons
- Taxed withdrawals in retirement
- Required Minimum Distributions at 73
- Tax rate uncertainty in retirement
- State tax on withdrawals
Roth IRA Pros & Cons
Pros
- Tax-free growth and withdrawals
- No RMDs (can leave money untouched)
- Tax rate locked in now (predictability)
- Withdraw contributions anytime penalty-free
Cons
- No tax deduction now
- Higher effective cost now
- Income limits for direct contribution
- Lock in current tax rate (bad if rates drop)
Key Decision Factors
- Current vs Future Tax Rate: If retirement rate < current rate, Traditional wins. If retirement rate > current rate, Roth wins.
- Roth Income Limits: Direct Roth contributions limited above $146K/$161K (2024 single). Backdoor Roth possible but has pro-rata rule.
- Traditional Deduction Limits: If covered by workplace plan, Traditional IRA deduction phases out at higher incomes.
- RMDs: Traditional IRAs require withdrawals at 73. Roth has no RMDs during owner's lifetime.
- Flexibility: Roth allows contribution withdrawals anytime. Traditional withdrawals taxed and may have penalty before 59½.
- Tax Diversification: Consider having both types for flexibility in retirement tax planning.