Roth vs. Traditional 401(k)/IRA Calculator

The comparison almost every calculator gets wrong

The obvious way to compare a Roth account against a Traditional account is to put the same dollar amount into each one — say, $500 a month — and compare the balances decades later. That comparison feels fair. It is not. A Traditional contribution is pre-tax: the $500 comes straight out of your paycheck before income tax touches it, so putting $500 into the account costs you $500 of pre-tax salary. A Roth contribution is after-tax: to get $500 sitting in a Roth account, you first had to earn $500 of pre-tax salary and pay income tax on it, and only what survived that tax bill reached the account. Comparing equal nominal contributions quietly assumes the Roth saver found extra take-home pay from nowhere to make up the difference. In reality nobody has that extra money — it went to the IRS.

The economically fair comparison holds the thing that is actually scarce constant: the pre-tax salary you are willing to redirect toward retirement each year. Call that amount your annual contribution. Under a Traditional account, the full amount reaches the account and grows tax-deferred; the whole withdrawal is taxed as ordinary income later. Under a Roth account, that same pre-tax salary is taxed immediately at your current marginal rate, and only the after-tax remainder is deposited — but it then grows completely tax-free, with nothing owed at withdrawal. This calculator runs both scenarios from the same starting dollar amount of pre-tax salary, which is the only way the answer means anything.

A genuinely useful fact: equal rates mean equal outcomes

Once the comparison is set up this way, a clean identity falls out of it. If your marginal tax rate today and your assumed marginal tax rate in retirement are the same number, Traditional and Roth produce exactly the same spendable amount at retirement — not approximately the same, but mathematically identical, down to rounding. Multiplying a balance by (1 minus a tax rate) either at the end of a multi-decade growth run, or right at the start before that same growth run, lands on the same number when the rate itself never changes. This is a useful check on any Roth-versus-Traditional tool: type in equal rates and see whether the two sides actually match. If they do not, the tool's methodology — usually its handling of the contribution amount, not its tax maths — has a bug in it.

That identity is also the whole reason this decision comes down to a single question: is your tax rate more likely to be higher or lower in retirement than it is today? Traditional wins when retirement is the cheaper bracket, because you defer tax to the lower rate. Roth wins when retirement turns out to be the more expensive bracket, because you locked in today's cheaper rate before the increase.

Why the common advice leans one way by career stage

Most personal-finance guidance ties this decision to where you are in your career, as a rule of thumb rather than a certainty. Early-career earners are often in a lower tax bracket than they expect to reach later, which tilts toward Roth: pay tax now, while the rate is cheap. Peak-earning years, often the decade or two before retirement, tend to sit in a higher bracket than someone might occupy in retirement once a paycheck stops, which tilts toward Traditional: defer the tax to a year when the rate is likely lower. Neither direction is a rule — a high earner who expects an unusually large pension, rental income, or required distributions in retirement could easily land in a higher bracket later despite being at peak earnings now, and diversifying across both account types is a reasonable hedge against not knowing for certain.

Required minimum distributions: one real, current-law difference

One difference between the two account types is not a matter of assumption at all: required minimum distributions. Traditional 401(k) and Traditional IRA accounts require the owner to start withdrawing a minimum amount each year once they reach the applicable age. A Roth 401(k), by contrast, has not required lifetime RMDs from the original owner since a SECURE 2.0 Act change took effect for the 2024 tax year, which brought Roth 401(k)s in line with Roth IRAs — Roth IRAs never had a lifetime RMD requirement in the first place. This calculator does not model RMD timing or amounts either way; it only compares the spendable value of money you choose to withdraw, not when the law requires you to withdraw it.

For the year-by-year growth and employer-match side of a 401(k) — a question this calculator does not attempt to answer — see the 401(k) contribution calculator, which projects your balance at retirement and shows employer match you might be leaving on the table. That tool assumes a Traditional account and says plainly that it does not model the Roth-versus-Traditional tax question; this one exists to close exactly that gap.

What this calculator does not include

• State income tax in either period — this compares federal marginal rates only, and a real move between states before or during retirement can change the picture.
• Social Security benefit taxation, which interacts with your other retirement income and withdrawal bracket in ways this tool does not model.
• Employer matching contributions. A match is generally deposited pre-tax and taxed on withdrawal regardless of whether your own contribution is Traditional or Roth, so it sits outside this comparison rather than inside it.
• Roth IRA income eligibility limits. A Roth 401(k) has no income cap on contributions, but a Roth IRA does — above a certain income you cannot contribute to one directly. This tool models the shared mechanics of Roth versus Traditional treatment, not account-specific eligibility rules.
• Required minimum distribution timing and amounts, for either account type.
• Any change to your filing status, deductions, or overall tax situation between now and retirement — the calculator assumes both scenarios play out under comparably simple tax situations.