Roth vs Traditional IRA / 401(k)

One question decides this: pay tax now, or pay tax later? This tool puts the same dollars into each and shows what you actually keep.

ROTH · tax now, never again

−Paycheck is taxed first - you contribute after-tax dollars

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◈Grows tax-free for decades - no tax on dividends or gains, ever

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✓Withdraw 100% tax-free in retirement (59½+)

TRADITIONAL · tax later

✓Contribute pre-tax - the contribution is deducted, cutting this year's tax bill

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◈Grows tax-deferred - nothing taxed while it compounds

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−Every withdrawal is taxed as ordinary income in retirement

Rule of thumb Expect a higher tax rate in retirement → Roth wins · expect lower → Traditional wins · same rate → mathematically a tie

IRA limit $7,000/yr 401(k) limit $23,500/yr What can they hold?

Annual contribution

Current age

yrs

Retirement age

yrs

Expected return

Tax rate now

Tax rate in retirement

Results

Roth (after tax)

Traditional (after tax)

Winner

Total contributed

After-tax value in retirement

Roth advantage vs your retirement tax rate

The higher your retirement tax rate, the more Roth's tax-free withdrawals are worth versus Traditional - the dot marks your assumption.

Both paths contribute the same dollar amount each year from your current age to your retirement age. Roth is funded with after-tax dollars and withdrawn tax-free; Traditional is contributed pre-tax (so it costs less take-home today), grows tax-deferred, and is taxed as ordinary income on withdrawal. We show the actual after-tax balance each leaves you at retirement - no hypothetical side account. Ignores income limits, employer match, required minimum distributions, state taxes and future tax-law changes. An employer match (free money) makes capturing the 401(k) match worth it regardless of which type you choose.

About this tool

Roth or Traditional? This calculator compares the two honestly: the Traditional path invests the up-front tax deduction in a side account instead of ignoring it, then compares after-tax outcomes at retirement and finds the break-even tax rate where the answer flips.

The whole decision compresses to one comparison: your marginal tax rate today versus your expected rate in retirement. Pay tax now if you expect higher rates later (Roth); defer if you expect lower rates later (Traditional). Everything else is detail, which is exactly what makes the honest side-account math worth running.

Frequently asked questions

Roth or Traditional, which wins?

Roth wins if your retirement tax rate will be higher than today's; Traditional wins if it will be lower. For many people mid-career at peak earnings, Traditional deductions are worth more; early-career savers in low brackets usually favor Roth.

What if tax rates rise for everyone?

Broad rate increases favor the Roth, since its withdrawals are tax-free regardless. That uncertainty is a real argument for holding some of each, which also buys flexibility to manage taxable income in retirement.

Can I contribute to both?

Yes, subject to IRS annual limits across the accounts and income limits on Roth IRA contributions. Splitting contributions is a legitimate hedge on future tax rates, not indecision.