Roth vs Traditional calculator

Compare equal annual deposits into each account, with deposits at the beginning of each year. A Roth deposit comes from after-tax income; a fully deductible traditional deposit uses pre-tax income. Equal deposits therefore have different costs today. The result shows those costs, then a separate comparison using the same pre-tax income for both accounts.

What the comparison assumes

The model assumes fully deductible traditional contributions and a qualified Roth distribution. It applies one flat income-tax rate today and another to the entire traditional withdrawal. Actual eligibility, deduction limits, withdrawal rules, progressive tax brackets and future returns can change the comparison. The entered return is an illustration, not a prediction.

The calculator does not invest traditional tax savings in a separate account. Its equal-cost comparison instead reduces the Roth deposit by today’s income tax. Check the account’s rules and your own tax circumstances before interpreting either set of values.

Related reading

Roth vs Traditional IRA explains the tax comparison using one pre-tax amount. Financial accounts to open at your first job covers workplace-plan and account choices.

The formula this calculator uses

D = annual account deposit; r = annual return / 100
n = whole years; t_now and t_later = income-tax rates / 100
Deposits are made at the beginning of each year.
F = D * ((1+r)^n - 1) / r * (1+r), or D*n when r = 0
Equal deposits: Roth after tax = F; Traditional = F * (1-t_later)
Annual pre-tax income needed: Roth = D / (1-t_now); Traditional = D
Equal pre-tax income of D/year instead:
  Roth deposit = D * (1-t_now); Roth after tax = F * (1-t_now)
  Traditional deposit = D; Traditional after tax = F * (1-t_later)

What it assumes without asking

• A fully deductible traditional contribution and a qualified Roth distribution. Tax-free Roth earnings depend on satisfying the account’s distribution rules
• One flat income-tax rate today and one applied to the entire traditional withdrawal. This simplifies a progressive bracket system
• The same annual deposit at the beginning of every year, with a fixed return and no fees. The illustrated 7% is an assumption, not a forecast
• Contributions within the applicable limit and eligibility to make them; the calculator does not enforce those rules
• No separate investment of traditional tax savings. The equal-cost illustration reduces the Roth deposit instead; it does not add a taxable side account

One example: $6,000 deposited annually for 25 years at 7%, both tax rates 22%

What this calculator does not model

• Income phase-outs on Roth contributions and deduction limits on traditional ones
• State or payroll taxes, credits, employer matches and tax on a separate investment of traditional tax savings
• Changing returns or tax law, early-withdrawal penalties and required minimum distributions

The guide behind this tool

A number on its own does not tell you what to do with it. Roth against traditional compares a single pre-tax amount at different tax-rate pairs. Its equal-cost setup differs from the equal annual deposits shown first by this calculator.

This tool is general education, not personalized financial or tax advice. It simplifies contribution limits, matches, and state taxes. See our disclaimer.