Traditional vs Roth Calculator
Should you choose a Traditional (pre-tax) or Roth (after-tax) retirement account? This calculator compares the long-term after-tax value of both options.
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Frequently Asked Questions
When is a Roth account better than Traditional?
Roth is generally better if you expect your tax rate in retirement to be higher than your current rate. Paying taxes now at a lower rate means more tax-free income later.
When is a Traditional account better?
Traditional is generally better if you are in a high tax bracket now and expect a lower rate in retirement. The upfront deduction saves more than the future tax cost.
What if my tax rate stays the same?
If your current and retirement tax rates are identical, both options produce the same after-tax result. In practice, Roth still offers flexibility since withdrawals are tax-free.
Can I contribute to both Traditional and Roth?
Yes. You can split contributions between Traditional and Roth 401(k) accounts or maintain both a Traditional IRA and a Roth IRA, subject to annual contribution limits.
What are the income limits for Roth IRA contributions?
For 2026, Roth IRA contributions phase out for single filers between $150,000 and $165,000 MAGI, and for married filing jointly between $236,000 and $246,000 MAGI.
Use Cases
- Decide whether to elect Traditional or Roth contributions during your employer's open enrollment period.
- Model how different retirement tax rate assumptions change the outcome of each account type.
- Evaluate the impact of a career change or salary increase on the Traditional vs Roth decision.
- Plan a Roth conversion ladder by comparing current and projected future tax rates.
- Help early-career savers understand why Roth may be advantageous while in lower tax brackets.
Assumptions & Limitations
- The comparison assumes equal pre-tax dollars are available to invest in either account type.
- Traditional tax savings are assumed to be reinvested at the same rate of return as the retirement account.
- A single flat tax rate is applied at contribution and at withdrawal; progressive brackets are not modeled.
- Required minimum distributions (RMDs), early withdrawal penalties, and income phase-outs are not factored in.
- State income taxes are excluded; results reflect federal tax treatment only.
- This tool is for educational and planning purposes only and does not constitute tax advice. Consult a qualified tax professional for your specific situation.
Sources & References
- IRS Publication 590-A – Contributions to Individual Retirement Arrangements
- IRS Publication 590-B – Distributions from Individual Retirement Arrangements
- IRC Section 408A – Roth IRAs
- IRS Topic No. 451 – Individual Retirement Arrangements (IRAs)
- IRS – Traditional and Roth IRA Comparison Chart
Contribution limits and income phase-outs are updated for the 2026 tax year. Always verify current figures on IRS.gov before making financial decisions.