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Results are hypothetical illustrations based on the numbers you enter and simple assumptions: a constant return, the tax rates you enter, and no fees, penalties or income limits. They are not predictions or guarantees; real returns vary and can be negative. Educational content only. Not financial advice. Examples are hypothetical, not guaranteed. See our Disclaimer.
Quick answer: Roth or traditional comes down to one question: is your tax rate higher now or in retirement? If it is lower today, the Roth usually leaves you more after tax; if it is higher today, the traditional IRA usually wins; if the rates match, it is a tie. Example: $5,000 a year for 30 years at 7%, taxed at 12% now and 22% later, leaves about $472,304 in a Roth vs $418,633 in a traditional IRA. Hypothetical, not guaranteed.
How the Roth vs Traditional formula works
The calculator compares the two accounts at the same take-home cost, which is the fair way to line them up:
- Growth factor: F = ((1 + r)n − 1) ÷ r, where r is the yearly return and n the number of years (one contribution at the end of each year).
- Roth: you contribute C after tax. After-tax value = C × F, because qualified withdrawals are tax-free.
- Traditional: a deductible contribution costs less take-home, so the same C buys a contribution of C ÷ (1 − tax rate now). It grows to C ÷ (1 − tax now) × F, and you pay your retirement tax rate on withdrawal: after-tax value = C ÷ (1 − tax now) × F × (1 − tax in retirement).
- Who wins: divide one by the other and C and F cancel. The traditional IRA is worth (1 − tax in retirement) ÷ (1 − tax now) of the Roth. Lower rate later: traditional wins. Higher rate later: Roth wins. Same rate: tie.
Worked example
Inputs: $5,000 a year of take-home pay, 30 years, a hypothetical 7% yearly return, 12% tax rate now, 22% in retirement.
- Growth factor: (1.0730 − 1) ÷ 0.07 = (7.612255 − 1) ÷ 0.07 = 94.4608.
- Roth: $5,000 × 94.4608 = $472,304, all yours after tax.
- Traditional: $5,000 ÷ 0.88 = $5,681.82 a year contributed. $5,681.82 × 94.4608 = $536,709 at withdrawal, minus 22% tax ($118,076) = $418,633.
- Roth ahead by $53,671. Flip the rates (22% now, 12% later) and the traditional IRA ends at $532,856, ahead of the Roth by $60,552.
| Tax now / in retirement | Roth after tax | Traditional after tax | Winner |
|---|---|---|---|
| 12% / 22% | $472,304 | $418,633 | Roth by $53,671 |
| 22% / 22% | $472,304 | $472,304 | Tie |
| 22% / 12% | $472,304 | $532,856 | Traditional by $60,552 |
Example: $5,000 a year of take-home pay for 30 years at a hypothetical 7%, end-of-year contributions. Examples are hypothetical, not guaranteed.
2026 IRA contribution limit
For 2026, total contributions to all your traditional and Roth IRAs can’t be more than $7,500 ($8,600 if you’re 50 or older), or your taxable compensation if that is less, according to the IRS. Roth IRA contributions phase out at higher incomes, and deducting a traditional IRA contribution can be limited if you or your spouse have a workplace plan; check the IRS page for your numbers. If the traditional contribution in your result is above the limit, the calculator flags it.
What the calculator leaves out
- Tax rate guesses. Nobody knows future tax rates. Many people split contributions between both account types to hedge.
- Required minimum distributions. Traditional IRAs have them; Roth IRAs do not for the original owner, which can matter for heirs and flexibility.
- Your state. Include state income tax in both rates if you expect to move.
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Questions people ask
Is a Roth or traditional IRA better?
It depends on your tax rate now compared with your tax rate in retirement. If you expect a higher rate later, a Roth usually leaves more after tax; if you expect a lower rate later, a traditional IRA usually does. With equal rates the after-tax result is the same.
How does the Roth vs Traditional IRA calculator work?
It compares both accounts at the same take-home cost. The Roth gets your amount after tax and grows tax-free. The traditional account gets your amount divided by (1 minus your tax rate now), grows tax-deferred, and is taxed at your retirement rate when withdrawn.
What is the IRA contribution limit for 2026?
According to the IRS, total 2026 contributions to all traditional and Roth IRAs can't exceed $7,500, or $8,600 if you are 50 or older, or your taxable compensation if that is less. Income limits apply to Roth contributions and to the traditional IRA deduction.
Should I pick Roth if I am young?
Often, yes, because many people are in a lower tax bracket early in their careers than later. In the calculator's example, 12% now and 22% later, the Roth ends about $53,671 ahead after 30 years on $5,000 a year at 7%. Hypothetical, not guaranteed.
Can I contribute to both a Roth and a traditional IRA?
Yes, in the same year, as long as your combined contributions stay within the yearly IRA limit. Splitting between both is a common way to hedge against unknown future tax rates.