Traditional IRA vs Roth IRA

How to use the Traditional IRA vs Roth IRA

The Traditional IRA vs Roth IRA is free and runs entirely in your browser — no sign-up, and nothing you enter leaves your device. It opens pre-filled with a realistic example, so you can see how it works before replacing any figure with your own; the results update as you type. Press Calculate to refresh the result panel, or Reset to return to the example.

The inputs it asks for:

• Annual Contribution — a dollar amount.
• Years Until Withdrawal — a number.
• Current Tax Rate — a percentage (enter 6 for 6%).
• Retirement Tax Rate — a percentage (enter 6 for 6%).
• Expected Annual Return — a percentage (enter 6 for 6%).

The formula

Both accounts grow the same contribution at the same return; the difference is purely when tax is paid. The calculator grows each and taxes it in the right place:

Traditional = C · F · (1 − t_ret)
Roth        = C · (1 − t_now) · F
F = ((1 + r)ⁿ − 1) ÷ r

C

annual contribution

F

growth factor for a stream of yearly contributions

r, n

annual return, and years until withdrawal

t_now / t_ret

your tax rate now vs. in retirement

With the same contribution and return, the algebra collapses to one thing: the account taxed at the lower rate wins. Traditional bets your rate is lower in retirement; Roth bets it's lower now.

Worked example

Using the example values — Annual Contribution $6,000.00, Years Until Withdrawal 20, Current Tax Rate 24%, Retirement Tax Rate 22%, Expected Annual Return 6% — the Traditional IRA vs Roth IRA returns a Traditional Wins By of $4,414.27. It also reports Traditional (after-tax) ($172,156.57), Roth (after-tax) ($167,742.30), Pre-Tax Future Value ($220,713.55).

Prefer your own numbers? Change any field above and this recomputes instantly.

Key terms

Traditional IRA

Contributions may be pre-tax (deductible now); withdrawals are taxed in retirement.

Roth IRA

Contributions are after-tax now; qualified withdrawals are entirely tax-free.

Marginal tax rate

The rate on your next dollar of income — what actually applies to a contribution or withdrawal.

Tax-deferred

Growth that isn't taxed until money is withdrawn (Traditional) — or never, for qualified Roth withdrawals.

Frequently asked questions