Roth IRA Calculator

Compare Roth IRA vs Traditional IRA growth and see the tax-free advantage of a Roth account.

Results

Visualization

How It Works

This calculator compares how your money grows in a Roth IRA versus a Traditional IRA over time, accounting for taxes paid now versus taxes paid in retirement. It shows you the tax-free advantage of Roth accounts by calculating your after-tax balance in both scenarios, helping you understand which account type may benefit you more based on your current and expected future tax rates. This tool is designed for both quick estimates and detailed planning scenarios. Results update instantly as you adjust inputs, making it easy to compare different approaches and understand how each variable affects the outcome. For best accuracy, use precise measurements rather than rough estimates, and consider running multiple scenarios to establish a realistic range of expected results.

The Formula

Roth Balance = (Annual Contribution × [((1 + r)^n - 1) / r]) × (1 + r) + Current Balance × (1 + r)^n; Traditional After-Tax = [Roth Balance] × (1 - Retirement Tax Rate); Roth Advantage = Roth Balance - Traditional After-Tax Balance. Where r = annual return rate and n = number of years.

Variables

  • Annual Contribution — The amount you plan to deposit into your IRA each year (2024 limit: $7,000 for those under 50, $8,000 for 50+)
  • Current Balance — The money already saved in your IRA account that will continue to grow
  • Annual Return (%) — Your expected yearly investment growth rate as a percentage (S&P 500 historical average is ~10%)
  • Years Until Retirement — The number of years your investments will compound before you need to withdraw funds
  • Current Tax Rate (%) — Your marginal tax bracket today—the percentage of taxes you pay on your last dollar of income
  • Retirement Tax Rate (%) — Your expected tax rate when you withdraw funds in retirement (often lower, but this calculator lets you test different scenarios)

Worked Example

Let's say you're 35 years old, planning to retire at 65, and comparing a Roth IRA to a Traditional IRA. You plan to contribute $7,000 annually, currently have a $25,000 balance, expect 7% annual returns, are in the 24% tax bracket now, and expect to be in the 22% bracket in retirement. Over 30 years, your Roth IRA would grow to approximately $861,500 (completely tax-free). The Traditional IRA would grow to the same amount before taxes, but after paying 22% in retirement taxes, you'd have about $671,570 left. This means the Roth advantage is roughly $189,930—the money you avoid paying in taxes by choosing the Roth structure. The key insight: even though you contribute after-tax dollars to a Roth now, the tax-free growth on decades of returns makes a significant difference.

Practical Tips

  • If you expect your retirement tax rate to be higher than your current rate, a Roth IRA is almost always the better choice—you lock in paying taxes at today's lower rate
  • Don't just assume your tax rate will drop in retirement; consider that Social Security, Required Minimum Distributions, and capital gains from non-retirement accounts can push you into higher brackets
  • Use this calculator to test scenarios: run the numbers assuming you're in the 32% bracket in retirement instead of 22%, and watch how the Roth advantage grows even larger
  • Remember that Roth IRAs have no Required Minimum Distributions (RMDs) during your lifetime, giving you more flexibility and potentially lower lifetime taxes than Traditional IRAs
  • If you're self-employed or a small business owner, compare this Roth analysis against a Solo 401(k) or SEP-IRA, which allow much higher contribution limits ($69,000 vs $7,000 in 2024)

Frequently Asked Questions

What's the difference between a Roth IRA and a Traditional IRA?

With a Traditional IRA, you may deduct contributions on your tax return today, reducing your current taxes, but you pay income taxes on all withdrawals in retirement. With a Roth IRA, you pay taxes on contributions now, but all growth and withdrawals are completely tax-free. The choice depends on whether you expect to be in a higher or lower tax bracket in retirement.

Can I contribute to both a Roth IRA and a Traditional IRA in the same year?

Yes, but your combined contributions to both accounts cannot exceed the annual limit ($7,000 in 2024 if you're under 50). For example, you could contribute $4,000 to a Roth and $3,000 to a Traditional IRA in the same year, but not $7,000 to each.

What income limits apply to Roth IRAs?

In 2024, you cannot directly contribute to a Roth IRA if your Modified Adjusted Gross Income exceeds $146,000 (single) or $230,000 (married filing jointly). However, you can use the 'backdoor Roth' strategy by contributing to a Traditional IRA and converting it to a Roth, though this has tax complications if you have other Traditional IRA balances.

Can I withdraw money early from a Roth IRA without penalties?

You can withdraw your contributions (not earnings) anytime tax and penalty-free. To withdraw earnings penalty-free, you must be at least 59½ and have owned the account for at least 5 years. There are some exceptions for first-time home purchases, disabilities, and medical expenses, but generally, Traditional IRAs are more restrictive on early withdrawals.

How does this calculator help me decide which account to open?

Run your personal numbers through this calculator, testing both your realistic current tax rate and your best estimate for retirement. If the Roth advantage is large, the Roth is likely better for you. If it's small or negative, reconsider—that means you might pay more in taxes overall by choosing the Roth, which could happen if you expect significantly higher retirement income and tax rates.

Sources

  • IRS Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs)
  • IRS Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs)
  • Fidelity: Roth IRA vs. Traditional IRA Comparison
  • Vanguard: Understanding Roth IRA Conversion Rules
  • SEC: Investor.gov - Individual Retirement Accounts (IRAs)

Last updated: April 02, 2026 · Reviewed by the CalcSuite Editorial Team · About our methodology

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