Should I contribute to Roth or Traditional IRA? Compare both account types side-by-side to see which one saves you more money in taxes over your investment horizon. Enter your details below for an instant comparison.
Scenario: Alex earns $50,000/year, currently in the 12% tax bracket, and expects to be in the 22% bracket in retirement. Alex contributes $6,000/year for 35 years with a 7% return.
Why: When your current tax rate is lower than your expected retirement rate, paying taxes now (Roth) locks in the lower rate and saves more.
Scenario: Maria earns $180,000/year, currently in the 32% bracket, and expects a 22% bracket in retirement. She contributes $7,000/year for 20 years with 7% growth.
Why: When your current tax rate is higher than your expected retirement rate, deferring taxes (Traditional) lets you deduct at the higher rate now and withdraw at a lower rate later.
Scenario: Jordan earns $85,000/year, currently in the 22% bracket, expects 22% in retirement, contributes $6,500/year for 25 years at 6% return.
Why: When current and future tax rates are equal, Roth and Traditional produce identical after-tax outcomes (assuming constant rate).
Traditional IRA — contributions are tax-deductible now, so you save currentTaxRate × contribution in taxes today. Withdrawals are taxed at your retirement tax rate.
Roth IRA — contributions are made with after-tax dollars (no deduction now), but withdrawals — including all growth — are 100% tax-free.
Where:
The fundamental difference between a Roth IRA and a Traditional IRA is when you pay taxes. With a Traditional IRA, you get a tax deduction on contributions today, but pay income tax on withdrawals in retirement. With a Roth IRA, you pay taxes on your contributions now, and all withdrawals — including decades of compounded growth — are tax-free.
Your choice should primarily depend on whether your tax rate today is higher or lower than what you expect in retirement. If you're early in your career and expect to earn more later, a Roth locks in today's lower rate. If you're in your peak earning years and expect a lower income in retirement, the Traditional IRA's upfront deduction is likely better.
Traditional IRAs require you to start taking minimum distributions at age 73 (under current law), which can push you into a higher tax bracket in retirement. Roth IRAs have no RMDs, giving you more control over your retirement income and tax planning.
High earners who exceed the Roth IRA income limits can still contribute using a "backdoor" strategy: make a non-deductible Traditional IRA contribution, then convert it to a Roth IRA. This strategy requires careful tax reporting but allows anyone with earned income to access Roth benefits.
If your employer offers a 401(k) match, always contribute enough to get the full match before funding an IRA. The match is free money and typically exceeds any tax advantages. After that, use this calculator to decide whether Roth or Traditional IRA makes more sense for your additional retirement savings.
No. If your current tax rate is higher than your expected retirement tax rate, a Traditional IRA is better because you save at a higher rate now and pay a lower rate later. Roth is better when you expect to be in a higher tax bracket in retirement. Use this calculator with your actual numbers to see which wins for your situation.
Yes, but your total contributions across all IRAs (both Roth and Traditional) cannot exceed the annual limit — $7,000 in 2025 ($8,000 if age 50+). Many people split contributions to diversify their tax situation in retirement.
You can withdraw your contributions (not earnings) from a Roth IRA at any time, tax-free and penalty-free. Withdrawals of earnings before age 59½ may be subject to income tax and a 10% penalty unless an exception applies. Traditional IRA early withdrawals are generally subject to both tax and penalty.
No. Roth IRA contributions are made with after-tax dollars and do not reduce your taxable income in the year you contribute. Traditional IRA contributions are tax-deductible (within income limits), which lowers your current tax bill.
That's the biggest uncertainty in this decision. A common strategy is to contribute to a Traditional IRA to get the upfront deduction, and then also contribute to a Roth (via a Roth 401(k) or by splitting IRA contributions) to create tax diversity. Having both pre-tax and after-tax retirement savings gives you flexibility to manage your tax bracket in retirement.
Yes, the same logic applies to Roth 401(k) vs Traditional 401(k) decisions. However, 401(k) plans have much higher contribution limits ($23,500 in 2025 + $7,500 catch-up for 50+), and employer matches are always made on a pre-tax basis regardless of your election.
This calculator is for educational and illustrative purposes only and does not constitute financial, tax, or legal advice. Results are based on the assumptions you provide and do not guarantee future outcomes. Tax laws, contribution limits, and income thresholds are subject to change. Consult a qualified tax professional or financial advisor before making retirement contribution decisions. Past performance does not predict future returns.