Roth or Traditional? Let the numbers decide.

How Roth and Traditional IRAs differ

Roth IRA

Contributions use after-tax money.
Contributions are not deductible.
Qualified withdrawals are tax-free.
No lifetime RMDs for original owners (general rule).
Direct contributions can be limited by income.

Traditional IRA

Contributions may be deductible depending on income and coverage.
Earnings grow tax-deferred.
Deductible amounts and earnings are generally taxed on withdrawal.
RMD rules generally apply in retirement.
Nondeductible contributions create tax basis.

FAQ

Is Roth always better if I'm young?: Not necessarily. Youth gives more time for tax-free Roth growth, but Traditional can still win if your retirement tax rate is lower than today's marginal rate or if deductible Traditional contributions free up cash for taxable investing.
What matters more: my tax rate today or in retirement?: Both matter, along with contribution limits and taxable brokerage taxes. This calculator compares complete strategies using the same after-tax savings budget.
Does my income affect eligibility?: Yes. Roth direct contributions and Traditional deductibility phase out at certain MAGI levels. Employer plan coverage also affects Traditional deductions.
What if I already have a 401(k)?: 401(k) rules differ from IRA rules. Having a 401(k) can affect Traditional IRA deductibility when your income is above IRS thresholds, but you may still contribute to IRAs within limits.
Can I contribute to both IRAs?: You can contribute to both Roth and Traditional IRAs in the same year, but the combined amount cannot exceed the annual IRA limit.
What happens if I max out my IRA?: Extra savings in our model flow to a taxable brokerage account, with estimated dividend and capital gains taxes.
What if tax rates increase in the future?: Use the retirement tax sensitivity chart and break-even rate to see how higher future withdrawal taxes affect the comparison.
Why does the calculator include a taxable brokerage account?: When your after-tax budget exceeds IRA limits—or when Traditional tax savings create extra investable dollars—those amounts are invested outside IRAs. Ignoring them skews Roth vs Traditional comparisons.
What is a backdoor Roth IRA?: A backdoor Roth involves nondeductible Traditional contributions followed by a conversion. Complex conversion rules are out of scope for this version; do not treat it as the same as a direct Roth contribution.
Can I withdraw Roth contributions before retirement?: Roth contributions (not earnings) can often be withdrawn without tax, but early withdrawal rules, penalties, and exceptions are not fully modeled here.