Roth vs Traditional Calculator

What this calculator does

Find out whether a Roth or a traditional retirement account leaves you more money after tax. Both let your savings grow without yearly tax, but they tax you at different times. A traditional IRA or 401(k) takes your money before tax and taxes what you withdraw later. A Roth takes money you've already paid tax on. Then qualified withdrawals come out tax-free. Which one leaves you with more mostly comes down to one question. Is your tax rate now higher or lower than it will be when you withdraw?

This calculator makes that comparison fairly, like for like. It matches a Roth contribution with a larger traditional one that costs you the same take-home pay. That's possible because the traditional contribution goes in before tax. It projects both accounts to retirement and taxes the traditional balance at your expected retirement rate. Then it shows the difference and which account comes out ahead. It also shows the retirement tax rate at which they'd tie. The 2026 contribution limits are built in.

Where it's used

Why this math matters outside the classroom:

• First job decisions. A new graduate in a 12% bracket compares a Roth 401(k) with a traditional one, expecting a higher bracket later.
• Peak earning years. A saver paying 32% now who expects about 22% in retirement sees why pre-tax contributions may come out ahead.
• Comparing take-home cost. At a 22% rate, a $5,000 Roth contribution costs the same take-home pay as a $6,410.26 traditional one.
• Personal finance classes. Students use the geometric series sum to grow yearly deposits, then apply a tax rate before or after the growth.
• Splitting contributions. A couple unsure about future tax rates puts half their savings in each type and compares the outcomes.

Grade level and standards: Grades 11–12; Common Core State Standards for Mathematics HSA.SSE.B.4. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.

How to use it

1. Choose an IRA or a 401(k). Tick the box if you're 50 or older, which raises the limit.
2. Choose how to compare: equal take-home cost (the fair comparison) or equal contribution, with the traditional tax saving spent.
3. Enter the yearly contribution, your tax rate now and the rate you expect in retirement. Add the years until retirement and the expected return.
4. Read the difference and the break-even retirement tax rate. Then check the yearly table to see how the gap grows.

What the inputs mean

Compare by

Equal take-home cost compares what the same cut in take-home pay buys in each account. Equal contribution puts the same dollar amount in each. It assumes you spend the traditional account's tax saving, which is how many people actually behave.

Contribution per year

With equal take-home cost, this is the Roth contribution. The traditional contribution is this amount ÷ (1 − your current rate). It can't be more than the 2026 limit for the account.

Tax rate now

The rate on the last dollars of your income, because that's what a traditional contribution saves you. It's your federal bracket plus any state income tax rate.

Expected tax rate in retirement

The average rate you expect on traditional withdrawals in retirement. It depends on your retirement income, future tax law and where you live.

Expected annual return

Both accounts use the same average yearly return, since they can hold the same investments.

Formula and method

F = ((1 + r)^n − 1) ÷ r (future value of $1 a year)
Roth after tax = C × F
traditional contribution (equal take-home cost) = C ÷ (1 − current rate), up to the limit
traditional after tax = traditional contribution × F × (1 − retirement rate)
break-even retirement rate = current rate (when the limit doesn't bind)

C is the yearly contribution, r the yearly return and n the number of years. Each contribution is made at the end of the year. F is how much $1 saved every year grows to by retirement. Both accounts grow by the same F, so the only difference is when tax is taken out.

Let t₁ be your tax rate now and t₂ your rate in retirement. If the traditional contribution is C ÷ (1 − t₁) and its withdrawals are taxed at t₂, it's worth C × F × (1 − t₂) ÷ (1 − t₁) after tax. That beats the Roth's C × F exactly when t₂ is below t₁. In other words, with equal take-home cost and no limit in the way, the winner is the account that taxes you at the lower rate.

Sometimes the larger traditional contribution would go over the yearly limit. Then the traditional contribution is capped at the limit. The leftover take-home pay goes into an ordinary taxable account, and its gain is taxed at the retirement rate at the end. That's why a Roth can come out ahead at the limit, even when the tax rates are equal. It shelters more after-tax money.

Worked example

You can afford a $5,000 Roth IRA contribution each year for 25 years, expect a 7% return, pay 22% now and expect 15% in retirement.

1. F = (1.07²⁵ − 1) ÷ 0.07 ≈ 63.249038.
2. Roth: $5,000 × 63.249038 = $316,245.19, tax-free.
3. Traditional: the same take-home cost buys $5,000 ÷ 0.78 = $6,410.26 a year, which grows to $405,442.55.
4. Tax at 15% takes $60,816.38, leaving $344,626.17.
5. Roth minus traditional: $316,245.19 − $344,626.17 = −$28,380.98. The break-even retirement rate is 22%.

Result: With these assumptions, the traditional IRA ends about $28,380.98 ahead. The Roth would win if your retirement tax rate were above 22%.

Understanding the result

A negative difference means the traditional account leaves more after tax. A positive one favors the Roth. When the rates are close, the size of the gap matters more than its sign, because your future tax rate is a guess.

The break-even retirement rate is the key number. You might expect to pay more than that in retirement. Maybe you have large pensions or other taxable income, or you expect tax rates to rise. Then the Roth wins. If you expect to pay less, as many retirees with lower incomes do, the traditional account wins. Many people split their savings between both to hedge their bets.

Assumptions and limitations

• Contribution limits are the 2026 IRA and 401(k) limits, including the age-50 catch-up.
• Contributions are made at the end of each year, and both accounts earn the same steady return. Every withdrawal from the traditional account is taxed at one flat rate.
• Roth withdrawals are qualified and tax-free, and no early-withdrawal penalties apply.
• Some rules aren't modeled: the Roth IRA income phase-out and the higher 401(k) catch-up for ages 60 to 63. Employer matching (which is always pre-tax) and required minimum distributions are left out too. So is the effect of withdrawals on Social Security taxation or Medicare premiums.
• Real tax is progressive (higher slices of income pay higher rates) and changes with the law. A single flat rate in retirement is a simplification.
• This is general education, not tax or investment advice.

Frequently asked questions

Sources

• IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (checked 2026-10-18)

How this calculator is checked

Method: Future value of an ordinary annuity with tax applied at contribution (Roth) or withdrawal (traditional); equal take-home-cost gross-up C ÷ (1 − t); 2026 limits from IRS IR-2025-111 / Notice 2025-67 via src/lib/finance/tax-2026.ts. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.

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