Roth and Traditional retirement accounts differ in when you pay tax — now, or on withdrawal. This compares the after-tax value of each, for the identical pre-tax dollar amount.
How it works
The comparison
Roth: contribute after today’s tax, grow tax-free, withdraw tax-free
Traditional: contribute pre-tax, grow tax-deferred, pay tax on withdrawal
The single fact that decides the whole comparison
If your tax rate is identical now and at withdrawal, the two are mathematically equal — the most important, most often missed fact about this comparison. Paying tax before investing or after growing produces the same after-tax result when the rate doesn’t change, because multiplication commutes: (1 − tax) × growth equals growth × (1 − tax). The entire comparison comes down to one real question: will your tax rate in retirement be higher, lower, or the same as it is now — a genuine unknown this calculator can’t predict for you.
A Traditional balance isn’t entirely yours
Some of a Traditional account’s raw balance is a future tax bill. Comparing the two accounts’ raw balances without accounting for that overstates Traditional’s apparent value — this calculator compares after-tax spendable amounts specifically, which is the fair comparison.
How to use this calculator
- Enter the pre-tax amount you can contribute.
- Enter your current tax rate and your expected tax rate in retirement.
- Enter an expected return and time horizon.
Frequently asked questions
How do I know what my tax rate will be in retirement?
You genuinely don’t, with certainty — it depends on future tax law and your future income and deductions. Many people use their current rate as a starting estimate, or consider whether their retirement income is likely to be higher or lower than their current income.
Why would my tax rate be lower in retirement?
Common reasons include having lower total income after leaving full-time work, or being in a lower tax bracket than during peak earning years — though this isn’t universal, and some people’s retirement income exceeds their working income.
Is this comparison different for a 401(k) versus an IRA?
The core Roth-versus-Traditional tax logic is the same for both account types — this calculator’s math applies to either, though contribution limits and other rules differ between them.
Does this account for required minimum distributions?
No — Traditional accounts are generally subject to RMDs (see the RMD calculator on this site), which Roth IRAs are not during the original owner’s lifetime. That’s a separate consideration beyond the pure tax-rate comparison shown here.
What if I expect my tax rate to change partway through, not just be different at one point?
This calculator uses a single current rate and a single retirement rate — a genuinely fluctuating tax situation over many years is a more complex scenario than this simplified comparison models.
