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Roth vs Traditional IRA
Age, contribution, return, and both marginal tax rates — both accounts priced side by side.
X VS Y COMPARISON · MONEY · RETIREMENT
Roth vs Traditional IRA
Same contribution, same growth — very different ending. Put $7,000 a year into a Traditional IRA for 30 years at 7% and the tax break on the way in plus a lower rate on the way out leaves $581,878 after tax; the same money in a Roth leaves $515,756 — a $66,123 difference. Flip the tax rates and the winner flips too. Enter your age, return, and both tax rates and the calculator runs both doors — assuming you reinvest the Traditional tax savings, which is the assumption that makes the comparison honest.
What the comparison shows
At the defaults — 35 to 65, $7,000 a year, 7% growth, 22% tax now, 12% in retirement — the future value of the contributions is $661,226 either way. The Traditional IRA pays 12% tax on withdrawal and keeps $581,878; the Roth contributed $5,460 a year after the 22% tax bite and keeps $515,756. The gap is $66,123 — and the calculator also shows the $1,540 a year the Traditional IRA saves you in taxes right now, reinvested in the math.
| Output | Formula | What it means |
|---|---|---|
| Future value (pre-tax) | C × ((1 + r)n − 1) ÷ r | The compounded value of every contribution before any withdrawal tax: $661,226 at the defaults. |
| After-tax: Traditional | FV × (1 − retirement rate) | You deducted contributions going in, so withdrawals are taxed as income: $581,878 here. |
| After-tax: Roth | C × (1 − current rate) × annuity factor | You paid tax before contributing, so withdrawals are tax-free: $515,756 here. |
| The gap | Traditional after-tax − Roth after-tax | Positive means Traditional wins. Here: +$66,123 — driven by the 22% deduction vs the 12% withdrawal rate. |
| Tax saved now (Traditional) | C × current rate | The deduction’s cash value each year — $1,540 at the defaults. The comparison assumes you reinvest it. |
The elegant part: equal tax rates are a tie. Multiplying by (1 − 22%) before compounding vs after compounding is the same arithmetic — at 22% now and 22% later, both accounts land within $100 of each other. So the whole decision reduces to one bet: will your marginal rate in retirement be higher or lower than today’s? See every comparison in the series on the X vs Y comparisons hub.
Who uses this
- The peak-earning 45-year-old: paying 24% or 32% now and expecting a lower bracket in retirement — the calculator usually shows the Traditional deduction winning big.
- The early-career saver: in the 12% bracket now with raises ahead — paying tax today while it is cheap is the classic Roth case, and the calculator proves it.
- The 50+ catch-up planner: the 2026 limit jumps to $8,600 at 50+ — they rerun the math with the higher contribution to see how the winner changes with more dollars.
- The RMD-averse retiree: Traditional IRAs force required minimum distributions at 73 while Roth IRAs never do — they use the calculator for the math, then weigh the flexibility.
Accuracy & limitations
The comparison assumes one flat marginal rate today and one in retirement — real tax brackets are progressive, and your income path matters. It assumes you reinvest the Traditional IRA’s tax savings (the $1,540 a year at the defaults); spend the savings instead and the edge shrinks or flips. RMDs are not modeled: Traditional IRAs force required minimum distributions starting at age 73 (Roth IRAs never do), which can push you into a higher bracket than the retirement rate you typed. 2026 contribution and Roth income limits are not enforced in the inputs — check the guide for the phase-out ranges. Early-withdrawal penalties (10% before 59½), state taxes, and the Roth five-year rule are out of scope. Treat this as the direction and scale of the answer; your tax pro refines the rate assumptions.
Cite this calculatorBright Side Kit. “Roth vs Traditional IRA.” brightoolbox.com, 2026.
Bright Side Kit. "Roth vs Traditional IRA." https://brightoolbox.com/roth-vs-traditional-ira/ Accessed October 22, 2026.Frequently asked questions
If my tax rate is the same now and in retirement, does it matter which I pick?
For the math: no — it’s a tie. Paying 22% tax before contributing vs after compounding is the same multiplication in a different order, so both accounts land within $100 of each other. Then the decision turns on the extras: Roth IRAs have no required minimum distributions, and Roth contributions (not earnings) can be withdrawn anytime penalty-free. The retirement marginal tax rate calculator helps estimate your future rate.
When does the Roth IRA win?
When your retirement rate will exceed your rate today. In the calculator’s roth-wins branch (12% now, 22% in retirement), the Roth leaves $581,878 after tax against the Traditional’s $515,756 — a $66,123 edge. Young earners in low brackets now, and anyone expecting big pension/401(k) income later, are the classic cases.
What are the 2026 IRA contribution and income limits?
For 2026: $7,500 under 50, $8,600 at 50+ ($1,100 catch-up) — one combined cap across all your traditional and Roth IRAs, due by April 15, 2027. Roth eligibility phases out at $153,000–168,000 (single/head of household) and $242,000–252,000 (married filing jointly). IRS figures move with inflation — confirm on IRS.gov.
What is a backdoor Roth IRA?
For earners above the Roth income limits: contribute to a Traditional IRA (non-deductible at that income), then convert to a Roth. The conversion is the legal workaround Congress left open — but the pro-rata rule taxes the conversion if you hold other pre-tax IRA money, so talk to a tax pro before trying it.
Can I contribute to both a Roth and a Traditional IRA?
Yes — the $7,500/$8,600 limit is a combined cap across both, not per account. Some savers split contributions to hedge the tax-rate bet the calculator prices. The retirement number calculator sizes the total you need first; this calculator picks the account.
Do Roth IRAs have required minimum distributions?
No. Roth IRAs never force withdrawals — one of their biggest advantages for estate planning and bracket management in late retirement. Traditional IRAs start RMDs at age 73, and inherited IRAs have their own 10-year rule. If RMD avoidance is the goal, the calculator’s math understates the Roth case.