Roth IRA Calculator

Why Roth vs traditional matters

Traditional IRA contributions are tax-deductible now; withdrawals in retirement are taxed as ordinary income. Roth IRA contributions are taxed now; withdrawals are tax-free. The arithmetic:

Traditional final (pre-tax growth)  = Contribution × (1 + r)^n
Traditional after-tax withdrawal    = Final × (1 - retirement_tax_rate)

Roth final (post-tax growth)        = Contribution × (1 + r)^n
Roth after-tax withdrawal           = Final (tax already paid)

If your tax rate today equals your rate in retirement, the two are mathematically equivalent. In practice:

• Roth wins if your rate in retirement is higher (or taxes rise).
• Traditional wins if your rate in retirement is lower (common — retirees usually have less income).
• Roth wins on flexibility because contributions can be withdrawn at any time with no penalty.

2026 contribution limits

Income phase-outs (single filers, 2026): reduced contributions phase out from MAGI $153,000 to $168,000. Married filing jointly: $242,000 to $252,000.

Backdoor Roth

High earners who exceed the income limit can contribute to a traditional IRA (non-deductible), then convert to Roth. The conversion is a one-time taxable event on any pre-existing pre-tax balance, so it is cleanest if you have no other traditional IRA money.

Worked example

Contribute $7,500/year from age 30 to 65 (35 years) at 7% real return:

• Total contributions: $262,500
• Final Roth balance (tax-free): ~$1,037,000
• Tax-free growth: ~$774,000

Same contributions to a traditional IRA at 22% retirement tax rate:

• Final pre-tax balance: ~$1,037,000
• After-tax value: ~$809,000

Roth wins here by ~$228,000, assuming the 22% rate. If your retirement tax rate drops to 12%, traditional wins.

Key caveats

• Assumes constant contribution. In reality, contribution limits rise with inflation and your salary will usually grow.
• Assumes constant return. Real markets have sequence-of-returns risk — a bad first decade can dent long-term outcomes.
• Does not model withdrawals in retirement. Roth has no required minimum distributions (traditional does, starting at age 73).
• Tax code can change. Current Roth rules are unusually favourable; politically, they are a recurring target.

Roth vs 401(k)

Many employers also offer a Roth 401(k) option. The tax treatment is similar to Roth IRA but with much higher contribution limits ($24,500 in 2026, before catch-up). The strategic question becomes Roth vs traditional within the 401(k) rather than Roth IRA vs 401(k) per se.