Roth vs Traditional 401(k) & IRA Calculator
Roth or traditional? Compare what each leaves you after taxes in retirement, based on your tax rate today, your expected rate in retirement, and how long the money grows.
Better choice
How to compare Roth and traditional
- Enter how much you can set aside each year in pre-tax terms (for example, $7,000 of salary).
- Enter your marginal tax rate today (federal plus state) and your best guess for retirement.
- Set the years and return. The calculator compares the after-tax value of each option.
The core rule: tax rate now vs later
With a traditional account you deduct contributions now and pay tax on withdrawals later. With a Roth you pay tax now and withdraw tax-free. If your tax rate is the same in both periods, the two produce identical after-tax money: the math is the same multiplication done in a different order. So the decision comes down to whether you expect a higher tax rate now or in retirement.
Traditional tends to win for people in high brackets today who expect lower income in retirement. Roth tends to win for early-career savers in low brackets, people who expect higher future tax rates, and anyone who values tax-free flexibility. The comparison assumes the Roth contribution is your pre-tax amount reduced by today's tax, which keeps take-home pay equal.
Two practical wrinkles. If you max out the account, a Roth effectively shelters more money because the limit applies to after-tax dollars. Tick the checkbox to compare that case, where the traditional saver invests the tax savings in a regular account. Many people split contributions between both for tax diversification.
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Frequently asked questions
Which is better, Roth or traditional?
If you expect a lower tax rate in retirement, traditional usually wins; if higher, Roth wins; if equal, they are the same. Uncertainty is a good reason to use both.
What tax rate should I use?
Your marginal rate: the rate on your last dollar of income, federal plus state.
Are there income limits?
Roth IRAs have income limits for direct contributions; Roth 401(k)s do not. Traditional IRA deductibility phases out at higher incomes if you have a workplace plan.
Does this include required minimum distributions?
No. Roth 401(k)s and IRAs have no RMDs for the original owner, which is an added Roth advantage not modeled here.