IRA vs. Roth IRA Calculator

Compare the potential after-tax retirement income from a Traditional IRA and a Roth IRA.

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About the IRA Comparison Calculator

Choosing between a Traditional IRA and a Roth IRA is a critical retirement decision that hinges almost entirely on your current and expected future income tax rates. This calculator is designed to illustrate the long-term financial difference between these two powerful accounts. By projecting the growth of identical contributions, it reveals which account may provide you with more **spendable, after-tax money** in retirement based on your tax assumptions.

The Core Difference: When You Pay Taxes

  • Traditional IRA: You contribute with pre-tax dollars, potentially getting a tax deduction today. Your investments grow tax-deferred, but all withdrawals in retirement are taxed as ordinary income. This is generally beneficial if you expect to be in a lower tax bracket in retirement.
  • Roth IRA: You contribute with after-tax dollars, so there's no upfront tax deduction. Your investments grow completely tax-free, and qualified withdrawals in retirement are also tax-free. This is generally beneficial if you expect to be in the same or a higher tax bracket in retirement.

Frequently Asked Questions (FAQ)

Which IRA is better if my tax rate is the same now and in retirement?

Mathematically, if your marginal tax rate is identical when you contribute and when you withdraw, the final after-tax amount in both a Traditional and Roth IRA will be exactly the same. However, the Roth IRA offers more certainty, as future tax rates are unknown and could rise.

Are there income limits for contributing to these accounts?

Yes. The ability to contribute to a Roth IRA is phased out for higher-income earners. While anyone with earned income can contribute to a Traditional IRA, the ability to deduct your contributions is also phased out if you or your spouse are covered by a retirement plan at work. You should always check the current year's IRS income limitations.

Can I have both a Traditional and a Roth IRA?

Yes, you can have and contribute to both types of accounts. However, the annual contribution limit applies to the combined total of all your IRAs. For example, in 2024, the limit is $7,000 (or $8,000 if age 50 or over), which you could split between a Roth and Traditional IRA in any way you choose.