Roth vs Traditional Calculator
Enter what you would put in each year before tax, your marginal tax rate now and the rate you expect when you withdraw.
Higher After-Tax Value
Traditional
Roth After Tax
$299,560.24
Traditional After Tax
$337,965.39
of Which Invested Tax Saving
$0.00
Roth Minus Traditional
-$38,405.16
Break-Even Retirement Tax Rate
22%
How it works
Picture the same slice of your pay going to retirement either way. In a traditional (pre-tax) 401(k) or IRA the whole amount is invested and you pay income tax when you withdraw. In a Roth you pay today's tax first, invest what is left, and withdraw tax free.
Because growth multiplies both the same way, the comparison comes down to the two tax rates: if your rate in retirement is lower than your rate now, traditional ends up ahead; if it is higher, Roth wins; if they are equal, so are the results.
Traditional also leaves you with the tax you did not pay today. If you actually invest that saving in a taxable account, it adds to the traditional side, which pushes the break-even retirement rate above today's rate. The break-even rate is the retirement tax rate at which both choices leave you with the same after-tax amount.
Formula
FV(x) = x × ((1 + r)^n − 1) ÷ r (end-of-year contributions) Roth = FV(c × (1 − t_now)) traditional = FV(c) × (1 − t_retire) + side fund side fund = FV(c × t_now) − t_gains × (FV(c × t_now) − c × t_now × n) break-even t_retire = t_now + side fund ÷ FV(c)
Example
Putting $7,000 of pre-tax pay a year toward retirement for 25 years at a 6% return grows to $384,051.58 before tax. In a Roth at a 22% rate now, $5,460 a year goes in and grows to $299,560.24, all of it yours.
In a traditional account taxed at 12% in retirement, the $384,051.58 is worth $337,965.39 after tax, $38,405.16 more than the Roth. The break-even retirement rate is 22%: at that rate both come to $299,560.24.
Assumptions and limitations
- Tax rates are assumptions you choose. The bracket options show the latest year's federal taxable-income ranges from Rev. Proc. 2025-32; your rate in retirement depends on future law and your future income.
- The whole withdrawal is taxed at the single retirement rate you enter. Large withdrawals can span several brackets, and Roth withdrawals are tax free only if qualified (age 59½ and the five-year rule).
- The contribution is the same pre-tax amount either way. The Roth deposit is reduced by today's tax, so it fits under a contribution limit more easily; if you would contribute the full limit to either account, a Roth holds more after-tax money and this comparison understates it.
- The invested tax saving is taxed once on its gains at the rate you enter; yearly tax on dividends and interest is ignored, which flatters the side fund slightly.
- Contributions are made at the end of each year and the return is constant. State taxes are included only if you choose Other and add them to the rate.
- This is an estimate for planning. It is informational and educational and is not financial, tax or legal advice.
Frequently asked questions
Why do Roth and traditional come out equal when the tax rates match?
Multiplication is commutative: taxing the money before it grows or after it grows takes the same share when the rate is the same. Only the difference between the two rates, plus what you do with the traditional tax saving, separates them.
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