Roth vs Traditional Calculator

How the comparison works

A traditional 401(k) or IRA puts in your money before tax and taxes withdrawals. A Roth puts in money that's already been taxed and lets withdrawals out tax-free. To compare fairly, the calculator starts with the same pre-tax dollars: in a Roth, part of them goes to tax first.

Because multiplication order doesn't matter, the winner comes down to one question: will your tax rate be lower in retirement than it is now? If yes, traditional wins. If higher, Roth wins. If the same, they tie.

Example: $6,000 a year for 30 years at 7% grows to $566,764.72. At a 15% rate in retirement, the traditional account leaves $481,750.01. The Roth, taxed at 22% going in, leaves $442,076.48. Traditional comes out $39,673.53 ahead.

Reasons to choose a Roth anyway

• You expect higher rates later, because your income will grow or you think tax rates will rise.
• No required withdrawals. Roth IRAs and, since 2024, Roth 401(k)s have no required minimum distributions during your lifetime.
• Tax diversification. Having both lets you choose which to draw from each year to manage your tax bracket.
• Effectively saving more. If you'd max out either account, the Roth shelters more after-tax money, because the limit is the same dollar amount.

Early career, lower income? A Roth often makes sense. Peak earning years in a high bracket? Traditional usually does. Project a workplace plan with the 401(k) calculator.