Finance

Roth vs Traditional IRA Calculator

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Data updated: 28 abr 2026

Reviewed by: Hacé Cuentas editorial team (política editorial ) · Last reviewed: 28 abr 2026

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Choosing between a Roth IRA and a Traditional IRA is one of the most impactful retirement decisions you can make. The difference comes down to when you pay taxes: now (Roth) or later (Traditional). This calculator projects both accounts to retirement, applies the appropriate tax, and tells you which option leaves more money in your pocket.

Last reviewed: May 12, 2026 Verified by Hacé Cuentas Team Source: IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs), IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs), IRS: Retirement Topics — IRA Contribution Limits, IRS: Amount of Roth IRA Contributions That You Can Make for 2026, IRS: Traditional and Roth IRAs 100% private

When to use this calculator

Deciding which IRA type to open for the first time
Evaluating whether to convert a Traditional IRA to Roth
Planning contributions when you expect a lower tax rate in retirement
Comparing outcomes when current and retirement tax rates are equal
Maximizing after-tax wealth for early retirees or FIRE planners
Illustrating the long-term value of tax-free vs tax-deferred compounding

How it works

2 min read

What is a Roth IRA?

A Roth IRA is a retirement account where you contribute after-tax dollars and withdraw tax-free in retirement. Unlike Traditional IRAs, you pay taxes upfront at your current rate, but gains and distributions are never taxed again. The 2026 contribution limit is $7,000 annually for those under 50.

How It Works

Both a Roth IRA and a Traditional IRA grow tax-deferred inside the account, but they differ at contribution and withdrawal time:

Roth IRA: Contributions are made with after-tax dollars. Qualified withdrawals in retirement are 100% tax-free.

Traditional IRA: Contributions are made with pre-tax dollars (you get a deduction now). Withdrawals in retirement are taxed as ordinary income.

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Formula

Let:

C = annual contribution (IRS-capped)

r = annual return rate (decimal)

n = years until retirement

t_now = current marginal tax rate (decimal)

t_ret = retirement marginal tax rate (decimal)

FV = C × [(1 + r)^n − 1] / r

Roth after-tax balance    = FV
  (contributions were already taxed)

Traditional pre-tax bal.  = FV
Traditional after-tax bal. = FV × (1 − t_ret)

Tax savings (Traditional) = C × t_now × n
  (the deductions received over contribution years)

Difference = Roth_after_tax − Traditional_after_tax

Note: The formula uses end-of-year contributions (ordinary annuity). For beginning-of-year contributions the balance is multiplied by (1 + r), but this calculator uses the standard end-of-year assumption.

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2026 IRS Contribution Limits

Age	Annual IRA Limit
Under 50	$7,000
50 or older	$8,000 (includes $1,000 catch-up)

If you enter a contribution above the IRS cap, the calculator automatically caps it.

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Worked Example

Age 30 → retirement at 65 (35 years), $7,000/year, 7% return, 24% current rate, 22% retirement rate.

FV = 7000 × [(1.07^35 − 1) / 0.07]
   = 7000 × [10.6766 − 1) / 0.07]
   = 7000 × 138.237
   ≈ $967,659

Roth after-tax   = $967,659
Trad pre-tax     = $967,659
Trad after-tax   = $967,659 × (1 − 0.22) = $754,774
Tax savings now  = $7,000 × 0.24 × 35  = $58,800
Difference       = $967,659 − $754,774  = $212,885 in favor of Roth

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When the Traditional IRA Wins

The Traditional IRA produces a higher after-tax balance when your retirement tax rate is meaningfully lower than your current rate. The breakeven point is:

Traditional wins when: t_ret < t_now
Roth wins (or ties) when: t_ret ≥ t_now

This is a simplification — in practice, factors like state taxes, Required Minimum Distributions (RMDs starting at age 73), Roth conversion ladders, and estate planning goals also matter.

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Limitations

Assumes a constant annual return and tax rate throughout the accumulation period.

Does not model income phase-outs (Roth eligibility phases out at $150,000–$165,000 MAGI for single filers in 2026).

Does not account for state income taxes, which vary widely.

RMD rules for Traditional IRAs (age 73) can force taxable distributions, reducing the Traditional IRA's effective advantage.

This calculator assumes all Traditional IRA contributions are fully deductible (applies if you have no workplace plan or are below the deductibility threshold).

Frequently asked questions

What is the 2026 IRA contribution limit?

$7,000 per year for individuals under age 50. Those aged 50 or older may contribute up to $8,000 thanks to a $1,000 catch-up contribution. These limits apply across all your IRAs combined, not per account.

Can I contribute to both a Roth and a Traditional IRA in the same year?

Yes, but your combined contributions to both accounts cannot exceed the annual limit ($7,000 or $8,000). For example, you could put $3,500 in a Roth and $3,500 in a Traditional IRA.

What income limits apply to Roth IRA contributions in 2026?

Roth IRA contributions phase out for single filers with MAGI between $150,000 and $165,000, and for married filing jointly between $236,000 and $246,000. Above these limits, direct Roth contributions are not allowed (though a backdoor Roth conversion may be possible).

Does the Traditional IRA deduction have income limits?

Only if you (or your spouse) are covered by a workplace retirement plan. For 2026, the deduction phases out for single filers with MAGI between $79,000 and $89,000, and for married filing jointly between $126,000 and $146,000 when the contributing spouse has a workplace plan.

Why does the Roth IRA tend to win when tax rates are the same?

When current and retirement tax rates are identical, the math produces exactly the same after-tax result. Neither account has an inherent advantage in that scenario — the calculator will show a $0 difference. If rates diverge, the account that taxes you at the lower rate wins.

What are Required Minimum Distributions (RMDs) and do they affect this comparison?

Traditional IRAs require you to take minimum taxable withdrawals starting at age 73, which can push you into higher tax brackets. Roth IRAs have no RMDs during the owner's lifetime, making them attractive for wealth transfer and tax flexibility. This calculator does not model RMDs.

Is a 7% annual return realistic?

The historical long-run average real return of the US stock market is approximately 7% after inflation (10% nominal before inflation). It's a common planning assumption, but actual returns vary year to year and are not guaranteed. You can adjust this field to model conservative (5%) or optimistic (9%) scenarios.

What is a Roth conversion, and should I do one?

A Roth conversion moves funds from a Traditional IRA to a Roth IRA; you pay income tax on the converted amount in the year of conversion. It can be beneficial if you expect higher future tax rates or want to eliminate RMDs. This calculator models ongoing contributions, not conversions.

Can I withdraw contributions from a Roth IRA before retirement without penalty?

Yes. Roth IRA contributions (not earnings) can be withdrawn at any time, at any age, without tax or penalty. This gives Roth IRAs an emergency-fund flexibility advantage that this calculator does not capture.

What happens if I exceed the IRS contribution limit?

Excess contributions are subject to a 6% excise tax per year until corrected. The calculator automatically caps your input at the 2026 IRS limit ($7,000 or $8,000) to prevent over-contribution scenarios.