Roth vs. Traditional IRA Calculator

Frequently Asked Questions

When is a Roth IRA better than a Traditional IRA?

A Roth is better when you expect your tax rate in retirement to be equal to or higher than your current rate. This is common for younger people early in their careers who expect income growth, or anyone who expects tax rates broadly to rise. The Roth's key advantage is that all growth is permanently tax-free.

When is a Traditional IRA better?

A Traditional IRA is better when you're in a high tax bracket now and expect a meaningfully lower rate in retirement. The pre-tax deduction saves you more tax today than you'll owe on withdrawals later. This is common for high earners in peak earning years who plan to withdraw modestly in retirement.

What are the 2025 IRA contribution limits?

The 2025 IRA contribution limit is $7,000 per year ($8,000 if you're age 50 or older). This limit applies across all your IRAs combined — you can't contribute $7,000 to a Roth and $7,000 to a Traditional in the same year. Roth contributions are also subject to income phase-out limits.

What if I'm unsure what my retirement tax rate will be?

A common approach is to hedge by contributing to both — a Roth for tax-free flexibility and a Traditional to reduce taxes now. If you have a 401(k) at work, you may already have pre-tax money there, which makes a Roth IRA a natural complement to diversify your tax exposure in retirement.

Related Tools