Roth vs Traditional IRA Calculator
Choosing between a Roth IRA and Traditional IRA is one of the most important retirement planning decisions you'll make. The right choice depends on your current tax situation, expected future income, retirement goals, and estate planning needs.
This calculator helps you compare both options by analyzing the tax implications today and in retirement. See how your contributions could grow and discover which option may provide more after-tax income in retirement - factoriing in your projected retirement income tax bracked and state taxes.
Note that eligibility for Roth IRAs is phased out at higher income levels, though "back door" options do exist for transfering savings from a Traditional IRA into a Roth IRA.
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Current Tax Rate
Retirement Tax Rate
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Which Option is Better?
Calculator Assumptions
This comparison assumes the same annual contribution amount to either account type. Tax savings from Traditional IRA contributions are not assumed to be reinvested, since most people use tax refunds for other purposes - like reducing debt or other spending.
Since Roth IRA contributions are made with after-tax income, your annual cash flow is reduced based on your tax bracket. For example, if you're in the 25% tax bracket and save $5,000 in a Roth IRA, the cost of choosing the Roth is $1,250 in after-tax income. So the question is: do you want more income now or savings later?
Remember that tax laws can change. This calculator provides estimates based on current rules, some of which aren't explored here. Consider consulting with a financial advisor for personalized advice.