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MoneyMath

Roth vs Traditional IRA Calculator

The Reddit personal finance classic: 'Which IRA should I pick?' Answer depends on your current bracket vs your bracket in retirement — this calc shows both paths side-by-side.

🟢 Updated April 2026👤 Reviewed by MoneyMath Editorial⚡ Runs in your browser · no data sent
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2026 limits: $7,000 (under 50), $8,000 (50+).

Most retirees drop 1-2 brackets (lower income). High-savers may stay flat.

Roth Wins
$145,470
Roth nets $145,470 more over 30 years
Portfolio at retirement (both)$661,226
Roth: tax paid upfront$50,400
Roth net (after future tax-free withdrawal)$661,226
Traditional: deferred tax at retirement$145,470
Traditional net after withdrawal tax$515,756
Show the formula
FV = contrib × [(1+r)^n − 1] / r
Roth net = FV (contributions already taxed)
Traditional net = FV − (FV × retirement bracket)
Roth wins if: current bracket ≤ retirement bracket

The ONE rule that decides this

Compare your current marginal tax bracket to your expected marginal bracket in retirement. If today\'s bracket is higher, go Traditional (deduction now, tax later at lower rate). If today\'s bracket is lower, go Roth (tax now at cheaper rate, tax-free forever). At equal brackets, the math is identical — pick on secondary factors.

Why Roth usually wins for young / lower earners

  • Your bracket is low now (10–22%) but your peak-earnings bracket later may be 24–35%.
  • Tax-free growth compounds massively over 30–40 years.
  • No Required Minimum Distributions (RMDs) during your lifetime.
  • Better for heirs (they inherit tax-free, 10-year distribution window).

Why Traditional usually wins for high earners

  • Deducting at 32–37% now, paying 15–24% in retirement is a clear arbitrage.
  • Frees up cash now for other priorities.
  • Safer if you believe your peak earnings year is THIS year, not 10 years from now.

The underappreciated third option: split

Nothing says you must pick one. Many financial planners recommend tax diversification: some Roth, some Traditional, some taxable brokerage. In retirement you can pull from whichever bucket is tax-optimal given that year\'s income, tax law, and goals. Hedge the prediction.

Frequently Asked Questions

What are the 2026 contribution limits?

Roth IRA + Traditional IRA combined: $7,000 for under 50, $8,000 for 50+. Roth income phase-outs: $150,000–$165,000 single, $236,000–$246,000 married filing jointly (approximate 2026 figures — confirm current IRS).

What if my income is too high for Roth?

Use the "Backdoor Roth" — contribute to a non-deductible Traditional IRA, then convert to Roth. Watch the pro-rata rule: if you have pre-tax money in any IRA, the conversion is partially taxed. Empty your Traditional IRAs first (roll into a 401(k)) to make backdoor Roth clean.

Should I choose Roth 401(k) or Traditional 401(k)?

Same logic. Most employers offer both within the same 401(k) plan. You can split your contributions between them. The employer match is always Traditional (pre-tax) regardless of which you choose.

What about state taxes?

Your current state bracket matters too. High-tax states (CA, NY, NJ, OR) effectively make Traditional more attractive. If you plan to move to a no-income-tax state in retirement (FL, TX, NV, WA), Traditional gets an extra boost.

Is the 5-year rule on Roth important?

For withdrawals of earnings tax-free, your first Roth IRA contribution must be 5+ years old AND you must be 59½+. Contributions (principal) can be withdrawn anytime tax-free. Converted amounts have a separate 5-year clock per conversion.