Roth vs Traditional Calculator
Compare Roth and traditional retirement contributions on after-tax outcomes — the whole decision is one bet on your tax rate now versus in retirement.
The bracket your last dollar lands in today.
The entire decision is one bet — will your tax rate be higher now or in retirement? At equal rates the two come out identical to the dollar, which this calculator will happily demonstrate.
One bet, dressed up as a hard question
Strip away the jargon and the Roth-versus-traditional decision is a single wager — will your marginal tax rate be higher now, or when you withdraw? Pay the tax in whichever era charges you less.
This calculator makes the bet explicit. Enter the same pre-tax dollars both ways and it shows the after-tax outcome of each path. Set the two rates equal and watch the results match to the dollar — a result that surprises almost everyone and settles most internet arguments about “tax-free growth.”
How to guess your retirement rate
Nobody knows future tax law, but the structure of your own retirement is guessable. Most people’s taxable income drops in retirement — no salary, partially-taxed Social Security, withdrawals sized to spending — which is the case for traditional. The counterweights that argue Roth — you are early in your career and cheap brackets are temporary, you save aggressively enough that drawdowns plus required distributions will be large, or you expect rates in general to rise.
State lines matter too — deferring tax in California and withdrawing in a no-income-tax state is a real and legal arbitrage that pure federal math misses.
Two rules that outrank the choice
First — the employer match comes before this debate, in either account type; free money beats tax optimization. Second — contributing at all dwarfs contributing optimally. The gap between Roth and traditional at plausible rates is a rounding error next to the gap between saving and not saving, which the compound interest calculator will cheerfully demonstrate.
How this is calculated
Traditional = contributions grow, then taxed at your retirement rate Roth = contributions taxed now, then grow tax-free Equal rates produce identical outcomes — to the dollar.
Frequently asked questions
- Which is better, Roth or traditional?
- Whichever side of one bet you believe — traditional wins if your tax rate in retirement is lower than today; Roth wins if it is higher; equal rates tie exactly. Early-career and lower-bracket years favor Roth; peak-earning years in high brackets usually favor traditional.
- Why do equal tax rates produce identical results?
- Multiplication commutes. Taxing money then growing it gives the same result as growing it then taxing it at the same rate. The popular intuition that Roth wins because "the growth is tax-free" double-counts — traditional contributions were bigger by exactly the tax deferred.
- What tips the scales beyond the rates?
- Roth has structural edges the simple math misses — no required minimum distributions, tax-free withdrawals that keep Social Security from being taxed harder, and effectively more sheltered money when you max the same dollar limit. Traditional wins big for high earners planning to retire into lower brackets or lower-tax states.
- Can I just do both?
- Yes, and splitting is a legitimate hedge rather than indecision — nobody knows tax policy decades out. A common pattern is traditional 401(k) contributions during peak brackets plus a Roth IRA on the side, giving both tax treatments to draw from later.