Tool · Decision Aid
Roth vs. Traditional, when rates move
The textbook rule — “Roth if your current rate is lower than your retirement rate” — is true, but only at the first decimal place. Three effects the short version skips: (a) when you can't max both, Roth holds more real dollars; (b) RMDs drag Traditional starting at age 73; (c) Social Security, IRMAA, and state taxes get quietly more expensive on Traditional withdrawals. We model all three, alongside the clean apples-to-apples comparison.
All calculations run locally in your browser. Your inputs are never transmitted or stored.
1 · Household
When you'd start drawing from the IRA.
2 · The contribution
What leaves your checking account per year. Roth uses this as-is; Traditional grosses it up to equal take-home.
2026 Roth IRA limit is $7,500 under 50, $8,600 age 50+. For 401(k)s, $24,500 / $32,500 (age 50+) or $35,750 (ages 60–63).
Until age .
Through age .
3 · Tax rates
Combined federal + state on the last dollar.
Your best estimate — for Traditional withdrawals.
LTCG rate applied to the side account's gains at liquidation.
Annual tax leakage from dividends/turnover. Default ~0.5%.
4 · Growth
Nominal, pre-tax. Same rate applied to Roth, Traditional, and the side account.
Traditional RMDs raise provisional income (IRC §86) and can make more SS taxable; Roth withdrawals don't.
If you move to a lower-tax state, Traditional benefits (deferred state tax was never paid). Already included in your entered marginal rates — this is illustrative only.
Under SECURE Act's 10-year rule, non-spouse heirs empty the account by year 10. Roth is tax-free; Traditional is ordinary income stacked on top of the heir's income.
After-tax wealth at withdrawal
Traditional is actually two pools
Traditional IRA (after retirement tax)
Pre-tax contributions × growth × (1 − retirement rate).
Side account (after LTCG tax)
Tax savings from deduction, invested in taxable brokerage, liquidated at end.
Traditional total
Year-by-year projection
Yellow rows: RMDs begin · Green: Roth overtakes| Year | Age | Roth (tax-free) | Trad IRA (pre-tax) | Side-acct drag pool | Trad after-tax | Delta (Roth − Trad) |
|---|---|---|---|---|---|---|
What could flip the call
Beyond the headline rate comparisonHow sensitive is this answer?
One-input-at-a-timeBreak-even retirement rate
Rate in retirement where Roth and Traditional tie.
Break-even current rate
Your current rate where the tool would flip.
Horizon effect (RMD only)
Years past age 73 captured in this projection.
User Guide
How to use the Roth vs. Traditional Comparator
This tool answers one of the most common retirement-planning questions: should I contribute to a Roth IRA (or Roth 401(k)) or a Traditional IRA (or Traditional 401(k)) this year? The answer depends on the ratio of your current marginal tax rate to the rate you expect to pay on withdrawals in retirement. The tool asks you to specify both rates and runs the exact after-tax math.
The headline rule — "Roth if you think you'll be in a higher bracket later; Traditional if lower" — is correct as far as it goes, but it misses three things this tool models: the tax-free growth advantage (a Roth wrapper protects 100% of the growth, while Traditional protects only the pre-tax contribution times (1 − future rate)); the forced-RMD distortion on Traditional (you may be forced to withdraw in a higher bracket than you'd choose); and the estate-tax advantage of Roth (no RMDs for the original owner and preferential 10-year rules for non-spouse heirs).
Who should use this tool
Anyone deciding where to direct retirement contributions this year. This is a decision you re-make every year, because the inputs change — your current income, your projected retirement income, your marginal rates, and the tax laws themselves. A mid-career professional in the 22% bracket who expects to retire in a no-tax state at a 12% effective rate gets a different answer from a high-earner in the 37% bracket with a paid-off mortgage and a plan to delay Social Security to 70.
The tool also serves readers trying to decide between Roth and Traditional inside a 401(k) plan — the math is identical to the IRA case, just with higher limits.
Walking through the inputs
Contribution amount. The annual dollars you're directing to retirement. Enter the same number in both columns — the tool handles the fact that $7,500 pre-tax is worth less after-tax than $7,500 Roth.
Current marginal tax rate. The federal rate on the next dollar you earn. Add state tax if applicable. This is what the Traditional contribution saves you today.
Expected future marginal rate. Your best estimate for the rate you'll pay on withdrawals. This is the hardest input. Default to your current rate if you genuinely don't know — that's the break-even assumption.
Years until withdrawal. How long the money compounds tax-free or tax-deferred. Longer horizons magnify both the Roth growth advantage and the Traditional RMD exposure.
Expected annual return. Real return, not nominal. 5% is a reasonable default.
How to read the result
The tool returns terminal after-tax value under both paths plus the ratio between them. If Roth wins, the ratio is greater than 1.0 and the tool reports how many basis points of annualized return the Roth wrapper is worth relative to Traditional. If Traditional wins, the ratio is less than 1.0.
The tool also shows a sensitivity analysis: how does the answer change if your future rate is two points higher, two points lower? This is important because your future rate is the input you know least precisely, and you want to know whether the answer is stable across a plausible range.
Common mistakes this tool prevents
- Using the effective rate instead of the marginal rate. The current-year contribution saves you at your marginal rate (the top rate applied to the last dollar). Your future withdrawal rate is actually your blended effective rate on retirement income. Mixing the two produces a wrong answer.
- Ignoring state-tax arbitrage. If you're in a high-tax state now and plan to retire in a no-tax state, Traditional becomes meaningfully more attractive than the federal-only math suggests.
- Forgetting RMDs. Traditional forces distributions starting at age 73 (rising to 75 for those born in 1960 or later under SECURE 2.0 §107). If your RMD is more than you'd naturally spend, you lose flexibility. The tool models this.
- Overweighting current vs. future rates when the horizon is long. Over a 40-year horizon, the tax-free growth on Roth dominates the rate-arbitrage effect. Young contributors should generally choose Roth even if current and expected future rates are similar.
- Not considering the Roth's strategic value. Roth balances don't increase MAGI in retirement, which protects you from IRMAA spikes, Social Security taxability thresholds, NIIT, and ACA subsidy cliffs. These are hard to monetize in a simple calculator, but they tilt the decision toward Roth for anyone with flexibility.
After you have the answer
If the answer is Roth, contribute to the Roth IRA (checking eligibility first) and direct your 401(k) elections to Roth. If the answer is Traditional, do the reverse. Many people split — for example, Roth IRA outside work and Traditional 401(k) at work — which hedges the rate-arbitrage uncertainty. The asset-location pillar covers how to allocate investments across the two wrappers after you've decided the split.
Worked example: Dan, 32, earning $140,000 in Illinois
Dan is 32, earns $140,000 as a W-2 engineer, lives in Illinois (flat 4.95 % state income tax), and can contribute the full $7,500 to either a Roth IRA or split between Traditional and Roth. His federal marginal rate is 24 %; combined federal-plus-state he pays 28.95 % on the next dollar. He expects to retire at 65 in a state with no income tax, drawing from a mix of Social Security and IRA distributions at a projected 22 % federal rate.
Running the comparator with a 33-year horizon and 5 % real return: the Roth contribution of $7,500 today compounds tax-free to roughly $37,400 in real terms at age 65, all of it tax-free to withdraw — after-tax value: $37,400. The Traditional contribution saves him $2,171 in tax today (28.95 % of $7,500), which invested in a taxable brokerage at his long-term-cap-gains rate (15 %) compounds to about $9,200. The Traditional IRA itself grows to $37,400 pre-tax, of which 22 % is federal tax at withdrawal (no state, since he's moved) — after-tax value: about $29,200 + $9,200 side account = $38,400.
Traditional wins by about $1,000 on a nominal basis — barely. But the comparator also shows the sensitivity: if Dan's retirement bracket turns out to be 24 % instead of 22 % (easy if he delays Social Security and has a larger IRA than projected), Roth wins. If his retirement bracket is 18 % (aggressive early retirement, small pot), Traditional wins by more.
The "break-even" future rate, holding everything else constant, is 22.8 %. Because Dan is fairly confident he'll be above that, Traditional is the defensible choice for this year's contribution. If he were less certain, a 50/50 split would hedge the bet.
The comparator also surfaces a second factor: Roth protects against rate risk in a way Traditional doesn't. If federal rates rise materially in the next 30 years (a non-zero probability given structural deficits), Roth becomes much more valuable relative to Traditional. Dan may choose to lean 60/40 toward Roth for that hedge alone.
Methodology & sources
The formulas, spelled out
The baseline identity: rates-equal means ties expand_more
For any one year's contribution, if tnow = tret, Roth and Traditional produce identical after-tax wealth. The algebra: with pre-tax dollar G, the Traditional path is G · (1+r)N · (1 − tret); the Roth path starts with G · (1 − tnow) and returns G · (1 − tnow) · (1+r)N. These are equal iff tnow = tret.
This is why the textbook rule ("Roth wins if current rate < retirement rate") is correct in the equal-burden mode only. Every second-order effect this tool models — RMDs, SS torpedo, IRMAA, state change, legacy — breaks that symmetry in one direction or the other.
Mode A — equal after-tax burden expand_more
You specify an after-tax contribution budget B. The Roth contribution is B. The Traditional contribution is B / (1 − tnow) — the pre-tax amount that, after you pay tnow in forgone tax savings, leaves the same take-home reduction. This is the apples-to-apples version.
After-tax wealth at year N:
Roth = B · (1+r)N
Trad = [B / (1 − tnow)] · (1+r)N · (1 − tret)
Simplified, Roth wins iff (1 − tnow) > (1 − tret), i.e. tnow < tret. Pure rate comparison. No second-order effects in this mode.
Mode B — full contribution with taxable side account expand_more
Both paths put the same dollar amount L into the IRA (e.g. $7,500, the 2026 Roth limit). The Roth contribution is made with post-tax money; the Traditional contribution is deductible, and the tax savings L · tnow are invested in a taxable brokerage side account.
The side account grows at (r − drag) each year where drag is the approximate annual tax leakage from dividends and turnover (we default to 0.5%). At liquidation, any remaining unrealized gain is taxed at the LTCG rate.
After-tax wealth at year N:
Roth = L · (1+r)N
Trad IRA = L · (1+r)N · (1 − tret)
Side = L · tnow · (1+reff)N − gain · tltcg
This mode is the relevant comparison when you can afford to max either account but not more. Because the taxable side account pays drag and eventually pays LTCG tax, Roth has the mathematical edge even when tnow = tret. Roth's implicit "tax-sheltered space" is worth more per dollar than Traditional's.
Mode C — full horizon with RMD drag expand_more
A year-by-year simulation that adds SECURE 2.0's age-73 Required Minimum Distribution to Traditional. Each year beginning at age 73, Traditional forces out prior-year-end balance ÷ life-expectancy factor. That amount is taxed at tret; the after-tax residual reinvests in the same taxable side account as Mode B.
Life-expectancy factors come from the IRS Uniform Lifetime Table effective for 2022-and-later distributions (26.5 at age 73, 25.5 at 74, 24.6 at 75, etc., per Treas. Reg. §1.401(a)(9)-9). We run ages 73 through 100.
Roth IRAs have no RMDs for the original owner, so Roth keeps compounding tax-free the whole horizon. This mode is where Roth's edge grows most with years. It also surfaces the crossover year (if any) when Roth passes Traditional-plus-side.
Social Security tax torpedo — optional effect expand_more
IRC §86 taxes up to 85% of Social Security benefits once provisional income (AGI excluding SS + ½ of SS benefits + tax-exempt interest) exceeds $25,000 single or $32,000 MFJ. Traditional RMDs count toward provisional income dollar-for-dollar; qualified Roth withdrawals do not.
The effect: each Traditional RMD dollar in the phase-in zone can drag $1.50 or $1.85 of taxable income into the federal base — effective marginal rates as high as 40.7% or 49.95% on retirees who thought they were in the 22% bracket. Over 20+ years of RMDs, the penalty compounds into meaningful dollars.
We apply this only when you enable the "Model Social Security taxation" option and enter an annual benefit. We compute a simplified torpedo surcharge as SS × (tret − effective-rate-without-RMD) each year 73+ and add it to Traditional's cost.
Break-even and sensitivity expand_more
The break-even retirement rate is the tret at which Roth and Traditional tie, holding all other inputs constant. In Mode A it's simply tnow. In Mode B it's usually a few points below tnow — because even at equal rates the side-account friction gives Roth the edge. In Mode C it shifts further in Roth's favor with each additional RMD year.
The break-even current rate is solved by binary search: we sweep tnow from 0% to 50% and find where the Roth-minus-Trad delta crosses zero. This tells you the current marginal rate ceiling under which Roth is still preferred.
What this tool does not model expand_more
- Bracket arithmetic on retirement withdrawals. We treat the retirement rate as a single marginal. In reality, large RMDs stack and may spill into higher brackets. A more conservative
tretinput is the safer choice. - IRMAA tier crossings on retirement income. Unlike Traditional's active RMD, Roth withdrawals don't count toward MAGI; a meaningful effect for retirees hugging Medicare thresholds. Use the True Cost of a Conversion tool alongside this one.
- Current-year MAGI eligibility for Roth direct contributions. For 2026, single filers phase out between $153,000 and $168,000 MAGI; MFJ between $242,000 and $252,000. High earners need backdoor Roth.
- Employer match. If your employer matches 401(k) contributions, that dollar is "found money" regardless of Roth-vs-Traditional. Capture the full match first, then apply this tool to discretionary savings beyond the match.
- Rate dispersion and scenario testing. We model point estimates of current and retirement rates. Real futures contain variance. Always sense-check with
tretboth 5 points higher and 5 points lower than your central estimate. - Tax-law change risk. All of this runs on 2026 federal rules. OBBBA (2025) made most TCJA individual-rate provisions permanent, so we treat current rules as persistent. Future indexing changes are a modeling assumption.
Primary sources expand_more
- IRC §408A — Roth IRAs generally; §408A(c) governs the post-tax contribution model.
- IRC §219 — Traditional IRA deductibility rules.
- IRC §401(a)(9) — Required Minimum Distributions for qualified plans and Traditional IRAs; Roth IRAs exempted under §408A(c)(5).
- SECURE 2.0 Act §107 (Pub. L. 117-328) — raised RMD age to 73 for those turning 73 in 2023-2032, then 75 in 2033.
- Treas. Reg. §1.401(a)(9)-9 — Uniform Lifetime Table and Single Life Expectancy Table; updated effective 2022.
- IRC §86 — Social Security taxability; provisional-income thresholds.
- IRC §1(h) — preferential rates on long-term capital gains and qualified dividends (used for side-account liquidation).
- IRS Publication 590-A — IRA contributions, deductibility phase-outs.
- IRS Publication 590-B — IRA distributions, RMD tables, Roth ordering rules.
- Rev. Proc. 2025-32 — 2026 inflation adjustments (underlying the rate defaults).
Last reviewed: April 2026. For changes or corrections: corrections@rothirahub.com.
Read the companion articles
Foundation
Core Principles of Tax-Free Compounding
Why tax-free space is worth more per dollar than tax-deferred.
Gatekeeping
Eligibility & MAGI Phase-Outs
2026 direct-contribution income ceilings for Roth IRA.
RMD
Roth IRA RMD Rules
Original-owner Roths never distribute; inherited Roths do.
Related tool
True Cost of a Conversion
For when you already have a Traditional balance and want to convert.