IRA Calculator

Compare Traditional IRA and Roth IRA side by side. See which option gives you more after-tax retirement income based on your current and future tax rates.

IRA Details

yrs
yrs
$

2024 limit: $7,000 ($8,000 if 50+)

$
%
%

Your marginal tax rate now

%

Expected rate in retirement

Enter your IRA details and click "Calculate" to compare Traditional vs Roth IRA.

Related Calculators

Pro Tip

If your current tax rate is higher than your expected retirement rate, Traditional IRA wins. If your retirement rate will be higher, Roth wins. When tax rates are equal, the result is identical -- choose based on flexibility.

Try the 401(k) Calculator →

Popular Tools

Traditional IRA vs Roth IRA

An Individual Retirement Account (IRA) is a tax-advantaged investment account designed for retirement savings. The two main types are Traditional IRA and Roth IRA, each with distinct tax treatment that can significantly impact your retirement wealth.

Traditional IRA contributions may be tax-deductible, reducing your current taxable income. Your investments grow tax-deferred, but withdrawals in retirement are taxed as ordinary income. This is beneficial if you expect to be in a lower tax bracket in retirement.

Roth IRA contributions are made with after-tax dollars (no upfront deduction), but your investments grow tax-free and qualified withdrawals in retirement are completely tax-free. This is advantageous if you expect higher taxes in retirement or want tax-free income.

For 2024, the annual IRA contribution limit is $7,000 (or $8,000 if you are 50 or older). Income limits apply for Roth IRA contributions and for deducting Traditional IRA contributions if you have a workplace retirement plan. Consider contributing to both types for tax diversification.

IRA Comparison

Traditional After-Tax = FV × (1 − taxretirement)
Roth After-Tax = FV of after-tax contributions (tax-free)

Where:

FV = Future value at retirement

tax_retirement = Expected tax rate in retirement

tax_now = Current marginal tax rate

Example

$7,000/year, 7% return, 35 years, 25% tax now, 20% tax in retirement:

  • • Traditional: $7,000/yr pre-tax grows to ~$1,107,882
  • • Traditional after-tax: $1,107,882 x (1 - 0.20) = $886,306
  • • Roth: $5,250/yr after-tax grows to ~$830,912
  • • Roth after-tax: $830,912 (fully tax-free)
  • • Traditional wins by $55,394 when retirement tax rate is lower

Frequently Asked Questions

Which is better, Traditional or Roth IRA?
If you expect to be in a lower tax bracket in retirement (most people), Traditional IRA often wins because you defer taxes to when your rate is lower. If you expect higher taxes in retirement or want tax-free income, Roth is better. Many advisors recommend having both.
Can I contribute to both a 401(k) and an IRA?
Yes, you can contribute to both. However, your ability to deduct Traditional IRA contributions may be limited if you or your spouse has a workplace plan and your income exceeds certain thresholds. Roth IRA contributions have income limits regardless.
What are the IRA income limits?
For 2024 Roth IRA: contributions phase out at $146,000-$161,000 (single) or $230,000-$240,000 (married filing jointly). For Traditional IRA deductibility with a workplace plan: $77,000-$87,000 (single) or $123,000-$143,000 (married filing jointly).
What is a backdoor Roth IRA?
If your income exceeds Roth IRA limits, you can contribute to a non-deductible Traditional IRA and then convert it to a Roth IRA. This is legal and commonly used by high earners. Be aware of the pro-rata rule if you have existing Traditional IRA balances.
When should I start taking IRA withdrawals?
Traditional IRA required minimum distributions (RMDs) begin at age 73 (as of 2023). Roth IRAs have no RMDs during the owner's lifetime. You can withdraw penalty-free from either after age 59 1/2. Early Roth contributions (not earnings) can be withdrawn anytime.