Roth IRA Calculator — Roth vs. Traditional IRA
A free Roth IRA calculator that projects your retirement balance and compares after-tax outcomes between a Roth IRA (contribute after-tax, withdraw tax-free) and a Traditional IRA (contribute pre-tax, withdraw taxed as income). Enter your annual contribution, expected rate of return, time horizon, current marginal tax rate, and projected retirement tax rate — the calculator grows the balance year by year and applies the correct tax treatment at the end so you see real after-tax retirement income, not just the pre-tax balance. The decision usually comes down to one question: do you expect to be in a higher or lower tax bracket in retirement than you are today? Roth wins when retirement bracket is higher or equal; Traditional wins when retirement bracket is meaningfully lower. The 2026 Roth contribution limit is $7,500 ($8,500 at age 50+), with phase-out income limits starting at $153K single / $242K married. High earners above those thresholds may use the backdoor Roth conversion strategy. Enter your numbers below to see which account wins for your situation.
| Roth IRA | Traditional IRA | |
|---|---|---|
| Contributions (35 yrs) | $245,000.00 (after-tax) | $245,000.00 (pre-tax) |
| Tax saved during contributions | $0 | $53,900.00 |
| Account value at retirement | $967,658.15 | $967,658.15 |
| Tax at withdrawal | $0 | −$145,148.72 |
| Net After-Tax Balance | $967,658.15 | $822,509.43 |
| Roth IRA advantage: +$145,148.72 more after tax | ||
Assumes 7% annual return, contributions of $7,000.00/year for 35 years. Roth: 22% tax rate now, 0% at withdrawal. Traditional: 0% now, 15% at withdrawal. Both accounts grow identically — the only difference is when taxes are paid.
Roth IRA vs. Traditional IRA — The Core Difference
Both account types are individual retirement accounts that grow your investments tax-free while the money remains in the account. The difference is entirely about when you pay taxes:
- Roth IRA: You contribute after-tax dollars. No deduction now. All growth and qualified withdrawals are completely tax-free in retirement.
- Traditional IRA: You contribute pre-tax dollars (if eligible for the deduction). You get a tax break now. All withdrawals in retirement are taxed as ordinary income.
If your tax rate is the same before and after retirement, both accounts produce mathematically identical after-tax wealth. The Roth wins if your retirement tax rate is higher; the Traditional wins if your retirement tax rate is lower. Use our income tax calculator to estimate your current bracket and compare scenarios. In practice, most people benefit from having both types of accounts for tax flexibility, alongside a 401(k) for employer matching.
Side-by-Side Comparison
| Roth IRA | Traditional IRA | |
|---|---|---|
| 2026 contribution limit | $7,500 ($8,500 age 50+) | $7,500 ($8,500 age 50+) |
| Income limits (2026) | Phase-out $153K–$168K (single); $242K–$252K (MFJ) | No limit to contribute; deductibility phases out for some |
| Tax on contributions | After-tax (no deduction) | Pre-tax if eligible; non-deductible otherwise |
| Tax on growth | Tax-free | Tax-deferred |
| Tax on withdrawals | Tax-free (qualified) | Taxed as ordinary income |
| Required Minimum Distributions | None (original owner) | Starting at age 73 |
| Early withdrawal penalty | 10% on earnings before 59½ (contributions any time) | 10% on all withdrawals before 59½ |
| Best when | You expect higher taxes in retirement | You expect lower taxes in retirement |
The Mathematics of Roth vs. Traditional
Both accounts use the same compound growth formula:
A = P(1+r)^n + PMT × ((1+r)^n − 1) ÷ r
Where A = future value, P = current balance, r = annual return rate, n = years, PMT = annual contribution.
Worked Example
Maria, age 30, contributes $7,000/year for 35 years until age 65. She expects 7% annual returns. Her tax rate is 22% now and she expects 15% in retirement.
Because Maria expects a lower tax rate in retirement (15% vs. 22% now), the Roth IRA still wins — even though she pays taxes at a higher rate today. This happens because the tax-free compounding of the entire balance over 35 years more than offsets the current-year tax cost.
2025 Roth IRA Income Limits
Unlike 401(k) plans, Roth IRAs have income limits that restrict contributions for high earners. If your modified adjusted gross income (MAGI) exceeds the phase-out range, you cannot contribute directly to a Roth IRA.
| Filing Status | Full Contribution | Phase-Out Range | No Contribution |
|---|---|---|---|
| Single / Head of Household | Under $150,000 | $150,000 – $165,000 | Over $165,000 |
| Married Filing Jointly | Under $236,000 | $236,000 – $246,000 | Over $246,000 |
| Married Filing Separately | $0 | $0 – $10,000 | Over $10,000 |
During the phase-out range, your maximum contribution is reduced proportionally. For example, a single filer with $157,500 MAGI is exactly halfway through the $15,000 phase-out range, so they can contribute half of $7,000 = $3,500.
The Backdoor Roth IRA
If your income exceeds the Roth IRA limits, you can still get money into a Roth via the "backdoor Roth" strategy:
- Make a non-deductible Traditional IRA contribution (no income limit for this).
- Convert the Traditional IRA to a Roth IRA immediately (before any earnings accumulate).
- Since you already paid tax on the contribution, only earnings (minimal if done promptly) are taxable at conversion.
Pro-rata rule warning: If you have any other pre-tax IRA balances (rollover IRA, deductible Traditional IRA contributions), the IRS requires you to calculate the taxable portion of the conversion proportionally. For example, if you have $63,000 in a pre-tax IRA and convert $7,000 (the new after-tax contribution), only $7,000 / ($63,000 + $7,000) = 10% is tax-free. Consult a CPA before executing a backdoor Roth if you have existing pre-tax IRA balances.
Roth IRA Withdrawal Rules
One of the Roth IRA's lesser-known advantages is its flexible withdrawal rules:
- Contributions: Can be withdrawn at any age, at any time, with no taxes or penalties. You already paid tax on this money.
- Earnings: To withdraw tax-free, the account must be at least 5 years old and you must be 59½ or older. Before that, earnings face income tax + 10% penalty (with some exceptions for first home purchase, disability, etc.).
- No RMDs: Unlike Traditional IRAs and 401(k)s, Roth IRAs have no Required Minimum Distributions during the original owner's lifetime. This is valuable for tax planning and estate planning — you can let the account grow indefinitely.
Frequently Asked Questions
What is the 2026 Roth IRA contribution limit?
The 2026 Roth IRA contribution limit is $7,500 per year ($8,500 if you are age 50 or older, due to the $1,000 catch-up contribution). This limit is shared between Roth and Traditional IRA contributions combined — you cannot contribute $7,500 to each. The limit applies per person; a married couple can each contribute the maximum to their own accounts. Source: IRS Notice 2025-67.
What are the 2026 Roth IRA income limits?
For 2026, Roth IRA contributions phase out for single filers with modified adjusted gross income (MAGI) between $153,000 and $168,000, and for married filing jointly between $242,000 and $252,000. Above these limits, you cannot contribute directly to a Roth IRA. If you exceed the income limit, you may use the "backdoor Roth" strategy (below) to still contribute indirectly.
What is a backdoor Roth IRA?
A backdoor Roth is a two-step workaround for high earners who exceed the Roth IRA income limits: (1) Make a non-deductible contribution to a Traditional IRA (no income limit for this). (2) Immediately convert the Traditional IRA to a Roth IRA. Since you already paid tax on the contribution, only the earnings (usually minimal if done quickly) are taxable at conversion. Important caveat: if you have other pre-tax IRA balances, the pro-rata rule may make a portion of the conversion taxable. Consult a tax advisor.
When does a Roth IRA beat a Traditional IRA?
The Roth IRA wins when your tax rate in retirement is higher than (or equal to) your tax rate while contributing. This is common for: young earners in low tax brackets now who expect to earn more later; high earners with substantial 401(k) balances who will be in a high bracket in retirement; people who value having tax-free income in retirement for planning flexibility; and those who expect tax rates to rise over time. The Traditional IRA wins when your current tax rate is meaningfully higher than your expected retirement rate.
Can I contribute to both a Roth IRA and a 401(k)?
Yes. A Roth IRA and a 401(k) have separate contribution limits. You can max out both: $24,500 in a 401(k) (2026) and $7,500 in a Roth IRA simultaneously. Many financial advisors recommend using both: max out any employer 401(k) match first (free money), then contribute to a Roth IRA, then go back to the 401(k) up to the full limit. This gives you diversification between pre-tax (401k) and after-tax (Roth) accounts, providing tax flexibility in retirement.