⚑ An estimate, not advice
This tool provides estimates for educational purposes only and is not financial, tax or legal advice. Consult a licensed professional before making decisions.
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Verdict
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$0Roth balance (after-tax)
$0Traditional balance (after-tax)
$0Dollar difference
$0Yearly tax deduction (Traditional)
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Best halal ETFs (US) →How the Roth vs Traditional IRA calculator works
Both accounts assume the same equal annual contribution. We grow those contributions using the future value of an ordinary annuity:
FV = C · [ (1 + r)n − 1 ] / r
where C is your annual contribution, r is your expected annual return as a decimal (return % ÷ 100), and n is the number of years until retirement.
A Roth IRA is funded with after-tax money, so qualified withdrawals are tax-free — the after-tax balance is simply FV. A Traditional IRA grows tax-deferred but is taxed on withdrawal, so its after-tax balance is FV × (1 − retirement tax rate).
The verdict compares your tax rates: if your current rate is higher than your retirement rate, a Traditional IRA tends to win because you take the deduction at the higher rate today. Otherwise, a Roth tends to win because tax-free withdrawals are worth more. A Traditional IRA also hands you a deduction now — about contribution × current tax rate each year. Invested rather than spent, that refund narrows the gap.
Frequently asked questions
What is the difference between a Roth and a Traditional IRA?
A Roth IRA is funded with after-tax money, so qualified withdrawals in retirement are completely tax-free. A Traditional IRA is usually funded with pre-tax money — you may deduct contributions now, the balance grows tax-deferred, and you pay income tax on withdrawals.
Should I choose a Roth or a Traditional IRA?
If you expect your tax rate in retirement to be lower than it is now, a Traditional IRA usually wins because you deduct at the higher current rate. If you expect the same or a higher rate later, a Roth usually wins because withdrawals are tax-free. This tool shows the after-tax balance of each so you can compare.
Does this include the Traditional IRA tax deduction?
The core comparison assumes the same dollar contribution to each and taxes the Traditional balance at your retirement rate on withdrawal. A Traditional IRA also gives a deduction today (contribution × current tax rate). If you invest that yearly refund, the gap narrows — shown separately as a note.
How is the future value of yearly contributions calculated?
It uses the future value of an ordinary annuity: FV = C·[(1+r)ⁿ−1]/r, where r is your expected annual return as a decimal and n is the number of years. It assumes one equal contribution per year and a constant rate of return.
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Sources & further reading
Future value of an ordinary annuity (standard finance formula); U.S. Internal Revenue Service (irs.gov) for IRA contribution rules and tax treatment. Read our full disclaimer →