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Roth vs Traditional IRA Calculator

Evaluate your retirement savings with our Roth IRA calculator. Compare returns and make informed decisions for your financial future.

Personal Finance · Reviewed by FreeCalculators Editorial · Updated 2026-09-15

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How it works

The Roth vs Traditional IRA Calculator helps you understand the long-term effects of contributing to a Roth IRA versus a Traditional IRA. It considers factors such as your current tax rate, expected retirement tax rate, annual contribution, and the annual return on investment. For example, if you contribute $7,000 annually to a Roth IRA with a 7% return over 25 years, your after-tax balance at retirement would be calculated based on the post-tax contributions. In contrast, the Traditional IRA allows you to invest pre-tax dollars, meaning you will pay taxes on withdrawals at your retirement tax rate. If your current tax rate is 24% and your retirement tax rate is 22%, the calculator will help you identify the point at which the Roth IRA becomes more beneficial, factoring in the 'Roth Advantage'—the additional amount you could potentially save by choosing a Roth IRA. This comprehensive analysis empowers you to make informed decisions about your retirement savings strategy.

Tips

  • Consider your current and expected future tax rates when choosing between a Roth and Traditional IRA.
  • Maximize your contributions to take full advantage of tax benefits; the limit for 2023 is $7,000 per year if you're under 50.
  • Review your investment strategy regularly to ensure your annual return aligns with your retirement goals.
  • Consult a financial advisor to tailor your retirement plan based on your unique financial situation.

Frequently asked questions

What is the contribution limit for IRAs in 2023?
The contribution limit for both Roth and Traditional IRAs is $7,000 per year for individuals under 50, and $8,000 for those 50 and older.
How is the 'Roth Advantage' calculated?
The 'Roth Advantage' is calculated by comparing the after-tax balance of a Roth IRA to the after-tax balance of a Traditional IRA at retirement, considering the different tax rates.
What happens if I withdraw from my Roth IRA before retirement?
You can withdraw your contributions from a Roth IRA at any time without penalty, but earnings are subject to taxes and penalties if withdrawn before age 59½ and before the account has been open for five years.
Can I convert my Traditional IRA to a Roth IRA?
Yes, you can convert a Traditional IRA to a Roth IRA, but you will have to pay taxes on the converted amount at your current tax rate.