Pay the tax now, or pay it later?
That single question is the whole game. A Roth account taxes your money on the way in and never again; a Traditional account skips the tax now but taxes every dollar on the way out. If money grew the same and limits didn’t exist, the better choice would come down purely to whether your tax rate is higher today or in retirement. The wrinkle is that a pre-tax Traditional dollar isn’t the same as an after-tax Roth dollar — and accounting for that is where most calculators go wrong.
The fair comparison
Roth grows an after-tax contribution and is withdrawn tax-free. Traditional grows the full pre-tax contribution, taxed on withdrawal —plus a taxable side account funded by the annual tax saving the deduction creates.
We grow each stream at your expected return, tax the side account’s gains once at withdrawal, then solve for the retirement tax rate at which the two come out equal — your break-even.
What makes this calculator different
- It invests the tax savings. The Traditional deduction is real money. We invest it in a taxable side account — the only fair way to compare. Skip it (as most tools do) and Traditional is understated whenever your current tax rate is above zero.
- It solves for your break-even tax rate. Instead of a single yes/no, you get the retirement tax rate at which the two tie — so you can judge which side your real expectations fall on.
- The headline is the dollar difference. The winner and how many after-tax dollars it’s worth, not just a vague “depends.”
- Shareable. Every input lives in the URL, so you can save or send your exact scenario.
Frequently asked questions
What’s the difference between a Roth and a Traditional account?+
You fund a Traditional account with pre-tax dollars — the full contribution goes in and lowers your taxable income today — but every dollar you withdraw in retirement is taxed as income. A Roth is the mirror image: you contribute after-tax dollars (no deduction now), and qualified withdrawals later are completely tax-free. So the whole decision comes down to one thing: do you pay the tax now (Roth) or later (Traditional)?
Is it really just about my tax rate now versus in retirement?+
Largely, yes. If your tax rate in retirement will be higher than it is today, paying the tax now at the lower rate — Roth — comes out ahead. If your retirement rate will be lower, deferring the tax with a Traditional account wins. When the rates are equal the two are mathematically identical for the contribution itself. This calculator solves for the exact break-even retirement tax rate so you can see which side of the line your expectations fall on.
Why does investing the Traditional “tax savings” matter so much?+
Because a pre-tax dollar and an after-tax dollar are not the same size. A Traditional contribution gives you an up-front tax deduction — real cash you’d otherwise owe the IRS. A fair comparison invests that saving in a taxable side account; ignore it and you understate Traditional whenever your current tax rate is above zero. Most simple Roth-vs-Traditional tools skip this entirely, which is exactly why they tilt toward Roth. This calculator models the side account (and taxes its gains at withdrawal) so the comparison is honest.
Don’t the contribution limits make this an unfair comparison?+
They can. Contribution limits are stated as a dollar amount, but a Roth dollar is an after-tax dollar while a Traditional dollar is pre-tax — so maxing out a Roth actually shelters more economic value. If you can max either account, Roth lets you tuck away more on an after-tax basis. This tool compares the same gross (pre-tax) amount available to contribute, with the leftover tax saving invested separately; if you’re limit-constrained, the Roth advantage is larger than shown here.
What about required minimum distributions and early withdrawals?+
Traditional accounts are subject to required minimum distributions (RMDs) starting in your 70s, forcing taxable withdrawals whether you need the money or not; Roth IRAs have no RMDs during the owner’s lifetime, which can be valuable for estate planning and tax control. Both generally penalise withdrawals before age 59½, though Roth contributions (not earnings) can often be withdrawn penalty-free. This calculator models a single lump-sum withdrawal and doesn’t account for RMD timing or penalties — treat those as additional points in Roth’s favour.
Disclaimer: This calculator is for educational purposes only. It uses flat tax rates, a constant return, and a simplified single-withdrawal model, and it doesn’t account for contribution-limit differences, RMD timing, early-withdrawal penalties, or state taxes. It is not financial or tax advice.