Roth IRA Calculator
A Roth IRA against a traditional IRA on the same out-of-pocket cost, after tax, and the retirement tax rate at which the two come out equal.
Result
Roth balance, after tax: $829,421.27Estimate
After tax on your assumed rates and return. Not tax advice; check contribution and income limits for your year.
- Traditional balance, after tax
- $851,248.15Estimate
- Roth minus traditional
- -$21,826.88Estimate
- Retirement tax rate at which they are equal
- 24%
- Traditional contribution with the same out-of-pocket cost
- $7,894.74
- Total you pay in
- $210,000.00
- Note
- The traditional account is ahead, because you expect a lower tax rate in retirement than now.
https://calcgallery.com/retirement-planning/roth-ira-calculator/
Results are arithmetic on the returns, rates and horizons you enter, not a forecast and not investment, tax or retirement advice. The site supplies no expected return, inflation rate, contribution limit, tax rate or withdrawal rate. Real returns vary from year to year, and fees, taxes and the order of returns all change the outcome. Check anything that matters with a qualified adviser. Read the full disclaimer
How to use the Roth IRA Calculator
- Enter what you would put into a Roth IRA each year, your age now and at retirement, and the return you want to assume.
- Enter your tax rate now and the rate you expect when you withdraw the money.
- Compare the two after-tax balances, and read the retirement tax rate at which they come out equal.
How the comparison is set up
Both accounts cost you the same each year. A Roth contribution is made from income that has already been taxed. A traditional contribution is deducted, so for the same out-of-pocket cost you can put in more: the Roth amount divided by one minus your tax rate now. Both grow at the same return. The Roth is withdrawn tax free; the traditional balance is taxed at your retirement rate.
Why it reduces to tax rates
Growth multiplies both accounts by the same factor. The traditional account starts bigger by one over (1 − tax now) and ends smaller by (1 − tax later). When the two rates are equal those cancel exactly, and the page shows the two balances equal to the cent. Any difference comes only from the gap between the two rates.
What this page does not do
Income limits and phase-outs, the five-year rule for qualified Roth withdrawals, state tax, required minimum distributions on traditional accounts, and the fact that a single marginal rate is a simplification of a whole tax bracket. Tax rates are your own inputs; no bracket is supplied.
With your numbers
- Roth: $6,000.00 a year for 35 years at 7% = $829,421.27, untaxed
- Traditional: $6,000.00 ÷ (1 − 24%) = $7,894.74 a year, grows to $1,091,343.78
- After 22% tax on withdrawal: $851,248.15
Quick reference
After tax on your assumed rates and return. Not tax advice; check contribution and income limits for your year.
| Example | Roth balance, after tax |
|---|---|
| 24% now, 22% later | $829,421.27 |
| 24% now and later | $829,421.27 |
| 24% now, 30% later | $829,421.27 |
| 32% now, 22% later | $829,421.27 |
| 12% now, 22% later, from 25 | $928,571.79 |
| 7,000 a year for 15 years | $151,049.95 |
Common questions about the Roth IRA Calculator
- Roth or traditional?
- On the arithmetic alone, it comes down to one comparison: your tax rate now against your tax rate when you withdraw. If you expect to pay less tax in retirement, the traditional account comes out ahead; if more, the Roth does; if the same, they are identical. Nobody knows their future tax rate, which is why many people hold some of each.
- What is the break-even tax rate?
- The retirement tax rate at which the two accounts leave you with exactly the same money. Compared fairly, it is simply your tax rate now. That is the point of the page: everything else, the return, the years and the amount, cancels out.
- Why not compare equal contributions?
- Because a 6,000 traditional contribution costs you less than 6,000: it cuts your tax bill now. At a 24% tax rate, the same 6,000 out of your pocket buys a 7,894.74 traditional contribution. Comparing 6,000 with 6,000 ignores that saving and makes the Roth look better than it is.
- Can I contribute to both?
- Often yes, within a single combined yearly limit, but the limit and the income thresholds for Roth contributions change every year. This page supplies neither; check the figures for your year.
- What is a backdoor Roth?
- A way for people above the Roth income limit to contribute to a traditional IRA and then convert it to a Roth. It has tax rules of its own that this page does not model.