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Free Roth vs Traditional IRA Calculator
Decide between Roth and Traditional IRA with the financial-planning industry's standard comparison: same dollar contribution to each account; Traditional contributor invests the annual tax refund in a separate taxable account; compare total after-tax wealth at retirement. Honest about IRA contribution caps ($7,000 / $8,000 with catch-up under IRC § 219) and LTCG drag on the side account at exit. Tells you the winner clearly and shows the wealth gap.
Sets the IRA contribution limit. Use 2026 for current-year planning; switch to 2025 to match the limit for the return you file in early 2026.
You
Capped at IRA limit: $7,000 (under 50) or $8,000 (50+).
Tax rates
Federal + state. Determines the Traditional tax savings.
Your expected bracket when withdrawing. Many retirees drop 1-2 brackets.
Investment assumptions
S&P 500 long-term: ~7% real, 10% nominal.
Applied to the tax-savings side account at exit. Federal LTCG: 0/15/20%.
Fair comparison winner
Roth wins by $3,760
Your expected retirement rate is high enough that Roth's tax-free withdrawal beats Traditional's upfront deduction.
Roth path
$707,511
Tax-free withdrawal
Traditional path
$703,751
After-tax + side account
Fair comparison winner
Roth wins by $3,760
Your expected retirement rate is high enough that Roth's tax-free withdrawal beats Traditional's upfront deduction.
Roth path
$707,511
Tax-free withdrawal
Traditional path
$703,751
After-tax + side account
Winner: Roth
by $3,760
Balance
$707,511
📐 Open methodology, sources & limitations
Formula
Both accounts receive the same annual contribution, capped at the IRA limit for the selected year: 2025: $7,000 (under 50) or $8,000 (50+, includes $1,000 catch-up) 2026: $7,500 (under 50) or $8,600 (50+, includes $1,100 catch-up) Contribution is applied at the start of each year and compounds monthly at monthlyRate = (1 + annualReturn)^(1/12) − 1. finalBalance = future value of the annual contribution stream Roth wealth = finalBalance (withdrawals tax-free) Traditional (IRA) = finalBalance × (1 − marginalRateRetirement) Side-account model (the fair comparison): annualTaxRefund = effectiveContribution × marginalRateNow sideBalance = future value of the refund invested in a taxable account sideGain = max(0, sideBalance − total refunds contributed) taxableSideAccount = refunds contributed + sideGain × (1 − capitalGainsRate) fairTraditional = Traditional IRA after-tax + taxableSideAccount Winner: Traditional wins if fairTraditional > Roth wealth.
Assumptions
- IRA contribution limit of $7,000 plus a $1,000 catch-up at age 50+ for 2025 (total $8,000); $7,500 plus a $1,100 catch-up for 2026 (total $8,600), per IRS Notice 2025-67.
- Contributions are applied at the start of each year and compound monthly.
- The Traditional contributor invests the annual tax refund (contribution × rate today) in a taxable side account.
- The side account is taxed only on its gain portion at the long-term capital gains rate at exit — contributed basis is untaxed; annual dividend tax drag is not modeled.
- You supply your own marginal rate today, marginal rate in retirement, and capital gains rate.
- A constant annual return is applied to both accounts.
Sources
- IRC §408A — Roth IRAs — §408A
- IRC §219 — Retirement savings (Traditional IRA contribution deduction) — §219
- IRC §1(h) — Maximum capital gains rates — §1(h)
- IRS Publication 590-A — Contributions to Individual Retirement Arrangements
- IRS Notice 2025-67 — 2026 IRA contribution limit and catch-up
This tool does NOT model:
- Income-based Roth contribution phase-outs
- Backdoor Roth conversions and the pro-rata rule on mixed deductible/non-deductible basis
- SECURE Act inherited-IRA distribution rules
- Required minimum distributions on the Traditional account
- State income tax differences between contribution and withdrawal
- Annual dividend and capital-gain-distribution tax drag on the side account
Last reviewed: 2026-06-12 · Tax year modeled: 2025 & 2026 (selectable)
This methodology section exists so you can verify the math. We show our formulas because you deserve to know how a number was calculated. This is calculation transparency, not financial advice.
What changed for 2026
IRS Notice 2025-67 raised the IRA contribution limit from $7,000 to $7,500 for 2026 — the first increase since 2024. The age-50 catch-up also moved, from $1,000 to $1,100; it had been frozen at $1,000 by statute for years and is now inflation-indexed under SECURE 2.0, so this is its first-ever bump. A saver aged 50 or older can therefore put $8,600 into an IRA in 2026, up from $8,000. The Roth-vs-Traditional math itself is unchanged — only the amount you can run through it grew. Select the year above to compare with the right cap.
| Limit | 2025 | 2026 |
|---|---|---|
| IRA contribution limit (under 50) | $7,000 | $7,500 |
| Catch-up, age 50+ | $1,000 | $1,100 |
| Total, age 50+ | $8,000 | $8,600 |
The Roth vs Traditional decision in one sentence
Traditional wins if your tax bracket today is higher than what you expect in retirement; Roth wins if your bracket today is lower than your expected retirement bracket. That's the entire framework. Everything else — IRA limits, conversion ladders, the SECURE Act, backdoor strategies — is implementation detail layered on top of that one trade-off. The same logic applies to the Roth-vs-Traditional choice inside a 401(k), just with much higher contribution limits.
This calculator uses the standard side-account methodology to make the comparison fair under real-world IRA contribution caps. Both accounts receive the same dollar contribution each year (capped at the IRC § 219 limit). The Traditional contributor invests their tax refund in a regular taxable brokerage account — modeled as compounding at the same return with LTCG paid on the gain at exit. At retirement: Roth wealth = the Roth balance; Traditional wealth = the after-tax Traditional withdrawal plus the after-tax side account.
When Traditional wins
- You're a high earner in your peak years. 32%+ bracket today, expecting 22% or lower in retirement → Traditional deducts at 32% and you pay at 22%. The 10-point gap is real money.
- You're front-loading retirement savings. If you plan to retire early or take a sabbatical, your retirement income gap could push you into a lower bracket than today.
- State tax arbitrage. Deducting in a high-tax state (CA, NY, NJ) and withdrawing in a no-income-tax state (FL, TX, NV, TN, WA) doubles the rate advantage.
- You're already maxing Roth somewhere else. Diversifying tax exposure means having some Traditional money helps you manage retirement bracket pressure (RMDs starting at 73 force withdrawals; mixing Roth + Traditional gives you control).
When Roth wins
- You're early in your career. 22% bracket today, expecting 32%+ in retirement (you're going to be a higher earner in 10 years) → Roth wins clearly.
- You expect tax rates to rise. Federal rates are historically low. Many planners assume bracket creep over the next 30 years; Roth locks in today's rate.
- You want estate flexibility. Roth accounts have no Required Minimum Distributions (RMDs) for the original owner — you can let them grow tax-free for as long as you like. Traditional forces withdrawals starting at age 73.
- You want simpler retirement planning. Roth withdrawals don't count toward provisional income for Social Security taxation, don't trigger IRMAA (Medicare premium surcharges), and don't complicate state taxes. Less complexity in retirement.
The LTCG drag on the side account
The fair comparison above invests the Traditional tax refund in a taxable brokerage account. Real brokerage accounts have ongoing tax drag from dividends and (occasional) capital-gain distributions, but for broad index funds the drag is small — most growth comes from price appreciation, which is only taxed when sold. The calculator models this approximation: contributed basis is untaxed at sale, gain portion is taxed at LTCG. Long horizons mean more of the side account is gain, so more LTCG drag — which slightly favors Roth at long horizons even when today's rate equals tomorrow's.
Frequently Asked Questions
Should I do Roth or Traditional?+
Traditional if your current marginal tax bracket is HIGHER than your expected retirement bracket. Roth if your current bracket is LOWER than your expected retirement bracket. That's the entire framework. Use this calculator to plug in your specific rates and see the dollar difference.
What are the 2025 IRA contribution limits?+
Per IRC § 219(b): $7,000 for under 50; $8,000 for age 50+ (includes the $1,000 catch-up). These limits are well below 401(k) limits because IRAs are designed for individual rather than employer-sponsored retirement saving.
Why does this calculator use a "side account" for Traditional?+
Because the IRA contribution cap is real. A naive "same gross contribution" comparison always favors Roth (because the same dollar in a Roth grows tax-free while the same dollar in a Traditional gets taxed at withdrawal). The fair comparison accounts for the fact that Traditional contributors get a tax refund each year — which they should invest. We model that side account at the same return rate, taxed at LTCG on the gain at exit.
What income limits apply to Roth IRA?+
2025 Roth IRA contribution limits phase out at $146,000–$161,000 MAGI for single filers and $230,000–$240,000 for married filing jointly (IRC § 408A(c)(3)). Above the phase-out, direct Roth contributions are zero. High earners often use a "backdoor Roth" — contribute non-deductible Traditional, then convert to Roth (subject to pro-rata rule if you have other pre-tax IRA balances).
What's the "pro-rata rule" on Traditional IRAs?+
If you have ANY pre-tax balance in any Traditional IRA, converting non-deductible Traditional contributions to Roth triggers tax on the proportional pre-tax portion (IRC § 408(d)(2)). Example: you have $50k pre-tax in an old rollover IRA and contribute $7k non-deductible to a new Traditional, then convert that $7k. The IRS treats it as if 87.7% of the conversion ($50k ÷ $57k) is pre-tax — so most of the conversion gets taxed. Strategy: roll pre-tax balances into your employer 401(k) first, then do the backdoor Roth.
Are Roth withdrawals always tax-free?+
Contributions: yes, at any time. Earnings: tax-free if the account is 5+ years old AND you're 59½+ (or first-home purchase, disability, death). Otherwise earnings withdrawn early are subject to ordinary income tax + 10% penalty. The 5-year rule starts the year of your first Roth contribution, even if you opened the account but didn't contribute.
Does Roth count toward provisional income for Social Security?+
No. Roth withdrawals don't count toward the "provisional income" calculation that determines how much of your Social Security benefit is taxable (IRC § 86). Traditional withdrawals do count — which can push your SS benefits into the 50% or 85% taxable tiers. This is a meaningful Roth advantage in retirement bracket management.
Is my data stored?+
No. All math runs in your browser. Your tax rate, contribution amount, and retirement plans never touch a server.
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