Roth vs Traditional Calculator

How Roth and Traditional taxes work

A Roth account taxes your money today. Qualified payouts in retirement then come out tax-free under 26 U.S.C. sections 408A(d)(1) and 402A(d)(1). A Traditional plan or deductible IRA skips tax today. Instead, it taxes the whole payout in retirement under sections 219(a) and 408(d) (IRS Traditional and Roth IRAs page).

Order of multiplication does not change the answer: C × (1 − t) × (1 + r)^N equals C × (1 + r)^N × (1 − t). When your tax rate now and in retirement are the same, and your out-of-pocket cost is the same, both plans end at the exact same cent.

Two things break that tie. First, your tax rate in retirement can differ from your rate today (Rev. Proc. 2025-32). Second, at the same dollar cap (Notice 2025-67), Roth shelters more after-tax money unless you invest the tax refund.

After-tax growth, side-account, and break-even formulas

gross_k = gross_(k − 1) + round(gross_(k − 1) × r) + C
Roth (invest = yes) = gross_N        Roth (invest = no) = round(gross_N × (1 − t_now))
side_k = side_(k − 1) + round(side_(k − 1) × r) + S        S = round(C × t_now)
side_net = side_N − round((side_N − N × S) × t_gains)
Traditional after tax = round(gross_N × (1 − t_retire)) + side_net

Worked examples: 2026 IRA and 401(k) tax paths

Workplace limit at 24% now and 22% in retirement ($24,500 a year, 25 years, 7% return, 15% gains tax). Both plans reach $1,549,601.40 before withdrawal tax. Roth keeps all $1,549,601.40 tax-free. Traditional owes $340,912.31 at withdrawal ($1,208,689.09 net), while the $5,880.00 yearly tax saving builds $371,904.27 ($147,000.00 basis plus $224,904.27 gain) and adds $338,168.63 after $33,735.64 of tax. Combined Traditional wealth is $1,546,857.72, so Roth edges ahead by $2,743.68 (break-even rate 21.82%).

Age-50+ IRA catch-up dropping from 24% to 12% ($8,600 a year, 15 years, 6.5% return, 15% gains tax). A Roth IRA grows to $207,966.66 tax-free. A Traditional IRA owes $24,956.00 at withdrawal ($183,010.66 net), and the $2,064.00 yearly tax refund grows to $49,912.02 ($30,960.00 basis plus $18,952.02 gain), adding $47,069.22 after $2,842.80 of tax. Total Traditional wealth reaches $230,079.88, beating Roth by $22,113.22 (break-even rate 22.63%).

Early saver rising from 12% to 24% ($7,500 a year, 35 years, 7% return, 15% gains tax). Over 35 years, the pre-tax balance reaches $1,036,776.69. Roth keeps all $1,036,776.69 tax-free. Traditional keeps $787,950.28 after $248,826.41 of withdrawal tax plus $110,476.25 from the $900.00 yearly tax saving ($898,426.53 total). Roth wins by $138,350.16 (break-even rate 10.66%).

2026 IRS limits and modeling assumptions

• Deposits go in once at the end of each year for N years. Growth compounds yearly and rounds half-up to the cent.
• Both plans earn the same pre-tax return. When Invest Traditional Tax Savings is Yes, the side account earns that same return. It pays capital gains tax at year N on growth above basis.
• The retirement tax rate applies to the whole Traditional payout, so it is an average rate, not a bracket. If your payouts cross several tax brackets, enter your blended rate under Custom.
• The seven 2026 federal tax brackets from 10% to 37% come from IRS Rev. Proc. 2025-32, and the 2026 plan limits come from IRS Notice 2025-67.
• Employer match dollars are left out of the yearly deposit input. Matches follow their own plan rules under section 401(m). Check your match in the 401(k) calculator.

These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.

How to choose or split Roth and pre-tax savings

Compare your tax rate today with your average rate in retirement in the federal income tax calculator. In 2026, the standard deduction ($16,100 single, $32,200 joint, $24,150 head of household under Rev. Proc. 2025-32) and the two lowest brackets shelter your first income. A worker in a middle bracket today often pays a lower average rate on Traditional payouts.

Capture your full match in the employer match calculator. Then check your paycheck in the take-home pay calculator. In the 10% or 12% bracket early in your career, a Roth deposit locks in that low rate.

Watch the 2026 Traditional IRA deduction limit if a work plan covers you ($91,000 single, $149,000 joint under Notice 2025-67). Above that cap, do not leave money in a nondeductible IRA. Use a Roth IRA if under the income cap, or report nondeductible basis and a Roth conversion on Form 8606.

Hold both pre-tax and Roth money to control your tax bracket in retirement. Fill the standard deduction and lower brackets with Traditional payouts first. Then draw from Roth for extra spending so you do not push capital gains from 0% to 15% in the capital gains tax calculator.

Roth vs. Traditional 401(k) and IRA questions