Is a Roth IRA or traditional IRA better?

Neither is better in every case. If your tax rate in retirement will be lower than it is today, the traditional account usually wins after tax; if it will be higher, the Roth usually wins. If you genuinely cannot guess which way your rate will move, splitting contributions between both gives you flexibility to manage your tax bracket in retirement.

What happens if my tax rate is the same now and in retirement?

The two accounts produce the same after-tax result, because the same percentage is removed either before or after the money compounds. Type the same rate into both fields on the calculator above and the gap between the two outcomes should shrink to essentially zero.

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

Yes, but the combined total across both accounts cannot exceed the annual IRA contribution limit set by the IRS for that tax year. You could, for example, split a 7,000 limit as 4,000 to one and 3,000 to the other.

Do required minimum distributions apply to Roth IRAs?

No, not during the original owner's lifetime. Traditional IRAs require you to start withdrawing a minimum amount once you reach the age set by law, which can push you into a higher bracket than planned; Roth IRAs held by the original owner are exempt from that rule.

Is there an income limit on contributing to a Roth IRA?

Yes. Eligibility to contribute directly to a Roth IRA phases out above income thresholds that differ by filing status and are adjusted most years, so a high earner may need to use a backdoor conversion or rely on a traditional account instead.

Why would a young saver choose a Roth even in a low tax bracket?

Because paying tax while your rate is low locks in that rate permanently on the contribution, and every dollar of growth afterward is never taxed again. If your income and bracket are likely to rise over your career, as in the 12%-to-22% scenario above, the Roth can end up worth several thousand dollars more than deferring the tax.

Roth IRA vs Traditional IRA calculator

This calculator compares two ways of shielding the same retirement contribution from tax: pay the tax now and let the rest grow tax-free (Roth), or defer the tax and pay it on withdrawal (traditional). The number it returns is the difference in what lands in your pocket at the end, and the entire answer hinges on one thing you cannot know for certain today — the tax rate you will face when you actually draw the money.

Why the comparison collapses to a single rate

If your tax rate is identical on the way in and on the way out, a Roth and a traditional account produce exactly the same after-tax outcome, because multiplying by (1 minus a rate) and applying it before or after decades of compounding gives the same result either way. Run the calculator with the current rate typed into both boxes and you will see the gap close to nothing.

That means the entire decision is a bet on direction: will your marginal rate in retirement be higher, lower, or the same as it is during your working years? Most people's income drops after they stop earning a salary, which is the standard argument for traditional accounts, but it is not automatic — required minimum distributions, Social Security, and a paid-off mortgage that removes a deduction can all push a retiree back into a higher bracket than they expected.

A useful benchmark: the break-even point is simply the current rate. If you believe your future rate will land above that figure, the Roth wins; below it, the traditional account wins; exactly on it, the two are a wash.

Three scenarios with different assumptions

A 35-year-old contributing 7,000 a year at 7% growth for 30 years, currently in the 24% bracket and expecting to drop to 12% in retirement (a common story for someone who plans to retire on far less than their working salary): the traditional (pre-tax) path nets about 46,891, versus about 40,497 after tax for the Roth. Deferring the tax was worth roughly 6,394 here because the rate genuinely fell.

A higher earner putting away 20,000 a year at 6% for 20 years, dropping from 35% now to an assumed 15% later: the pre-tax account nets about 54,521 against about 41,693 for the Roth, a gap of roughly 12,829. The bigger the assumed rate drop and the longer the horizon, the more this favours paying tax later.

Flip the assumption for a young saver in a low bracket now: 6,000 a year at 7% for 35 years, starting at a 12% rate and expecting 22% in retirement because their career (and tax bracket) will climb. Here the Roth nets about 56,372 versus about 49,966 pre-tax, a swing of roughly 6,406 in the Roth's favour, purely because the tax was locked in while the rate was still low.

Where the model stops being reliable

The formula treats the contribution, the growth rate and both tax rates as fixed for the entire period, which none of them are. Contribution limits rise with inflation almost every year, growth rates vary wildly year to year even if the long-run average holds, and tax brackets themselves get adjusted, replaced or expire on legislated dates.

It also assumes you can actually contribute the full pre-tax amount to a traditional account and the full after-tax amount to a Roth without hitting an income limit. Roth IRA eligibility phases out above certain modified adjusted gross income thresholds, and if you are covered by a workplace plan, your traditional IRA deduction can phase out too — in that band, the honest comparison is between a Roth and a non-deductible traditional contribution, which is a different and worse trade for the traditional side.

Required minimum distributions apply to traditional accounts starting at a set age and can force withdrawals — and the tax bill that comes with them — in years when you would rather have left the money invested. Roth IRAs held by the original owner are not subject to that rule during their lifetime, which the pure arithmetic above does not capture.

Contribution limits and filing-status caveats

The IRA contribution limit is a combined cap across all your traditional and Roth IRAs, not a separate allowance for each, so splitting a contribution between the two account types still counts against one ceiling. Anyone considering a 401(k) version of this same choice faces a much higher, separate limit and a different set of employer-match rules that this comparison does not model.

Roth eligibility depends on your tax-filing status and modified adjusted gross income, and the income bands for single filers and those married filing jointly are set at different levels each year. If your income is near a phase-out band, check the current-year IRS thresholds before assuming you can contribute the full amount either way.

Outside the US, few countries offer a direct Roth-style vehicle inside a standard workplace pension; UK pensions, for example, give tax relief on the way in and tax the income on the way out in a structure closer to the traditional side of this calculator, with a separate tax-free lump sum rule layered on top. Do not import a US Roth strategy into a non-US account without checking the local rules first.

Frequently asked questions

Is a Roth IRA or traditional IRA better?: Neither is better in every case. If your tax rate in retirement will be lower than it is today, the traditional account usually wins after tax; if it will be higher, the Roth usually wins. If you genuinely cannot guess which way your rate will move, splitting contributions between both gives you flexibility to manage your tax bracket in retirement.
What happens if my tax rate is the same now and in retirement?: The two accounts produce the same after-tax result, because the same percentage is removed either before or after the money compounds. Type the same rate into both fields on the calculator above and the gap between the two outcomes should shrink to essentially zero.
Can I contribute to both a Roth and a traditional IRA in the same year?: Yes, but the combined total across both accounts cannot exceed the annual IRA contribution limit set by the IRS for that tax year. You could, for example, split a 7,000 limit as 4,000 to one and 3,000 to the other.
Do required minimum distributions apply to Roth IRAs?: No, not during the original owner's lifetime. Traditional IRAs require you to start withdrawing a minimum amount once you reach the age set by law, which can push you into a higher bracket than planned; Roth IRAs held by the original owner are exempt from that rule.
Is there an income limit on contributing to a Roth IRA?: Yes. Eligibility to contribute directly to a Roth IRA phases out above income thresholds that differ by filing status and are adjusted most years, so a high earner may need to use a backdoor conversion or rely on a traditional account instead.
Why would a young saver choose a Roth even in a low tax bracket?: Because paying tax while your rate is low locks in that rate permanently on the contribution, and every dollar of growth afterward is never taxed again. If your income and bracket are likely to rise over your career, as in the 12%-to-22% scenario above, the Roth can end up worth several thousand dollars more than deferring the tax.

Sources

IRS — Retirement Topics: IRA Contribution Limits — Annual combined traditional-and-Roth IRA contribution limit and catch-up contribution rules (updated for the 2025 tax year).
IRS — Amount of Roth IRA Contributions You Can Make — Modified adjusted gross income phase-out ranges for Roth IRA eligibility by filing status for 2025.
IRS — Retirement Topics: Required Minimum Distributions (RMDs) — Confirms Roth IRAs are not subject to RMDs during the original owner's lifetime, unlike traditional IRAs.