What is the difference between Roth and Traditional IRA?

Traditional IRA contributions are tax-deductible now, but you pay taxes on withdrawals in retirement. Roth IRA contributions are made with after-tax money, but withdrawals in retirement are completely tax-free. The best choice depends on whether you expect higher taxes now or in retirement.

Which IRA is better: Roth or Traditional?

If you expect to be in a higher tax bracket in retirement, Roth is usually better (pay lower taxes now). If you expect a lower tax bracket in retirement, Traditional may be better (get the deduction now, pay less later). Our calculator helps you compare based on your specific tax rates.

What are the 2024 IRA contribution limits?

For 2024, the IRA contribution limit is $7,000 per year, or $8,000 if you're 50 or older (catch-up contribution). These limits apply to the total of all your Traditional and Roth IRA contributions combined.

Can I contribute to both Roth and Traditional IRA?

Yes, you can contribute to both types in the same year, but your total contributions cannot exceed the annual limit ($7,000 or $8,000 for 50+). Some people split contributions to diversify their tax exposure in retirement.

Are there income limits for IRA contributions?

Roth IRA has income limits: in 2024, single filers earning over $161,000 or married filing jointly over $240,000 cannot contribute directly. Traditional IRA has no income limits for contributions, but the tax deduction may be limited if you have a workplace retirement plan.

When can I withdraw from my IRA without penalty?

You can withdraw from either IRA type penalty-free at age 59½. Roth IRA also allows penalty-free withdrawal of contributions (not earnings) at any time. Early withdrawals from Traditional IRA typically incur a 10% penalty plus taxes.

IRA Calculator | Free Roth vs Traditional IRA Comparison Tool

What is an IRA Calculator?

An IRA calculator helps you estimate your retirement savings and compare the tax implications of Roth vs. Traditional IRAs. Our calculator shows you the real difference: while both accounts grow to the same gross amount, the after-tax balance differs based on when you pay taxes. Use it to determine which IRA type is better for your specific tax situation.

Why Use Our IRA Calculator?

Side-by-Side Comparison: See Roth vs Traditional IRA results together
Tax Rate Analysis: Factor in current and retirement tax rates
After-Tax Balance: See what you'll actually have after taxes
Visual Growth Chart: Watch your IRA grow year by year
100% Private: All calculations happen in your browser - no data sent to servers

Roth IRA vs Traditional IRA

Traditional IRA: Contributions are tax-deductible, reducing your taxable income now. Your investments grow tax-deferred. You pay income taxes when you withdraw in retirement.

Roth IRA: Contributions are made with after-tax dollars (no deduction). Your investments grow tax-free. Withdrawals in retirement are completely tax-free.

Key Insight: The question is whether you'd rather pay taxes now (Roth) or later (Traditional). If you expect higher taxes in retirement, choose Roth. If you expect lower taxes, choose Traditional.

When to Choose Each IRA Type

Choose Roth IRA if:

You're early in your career with lower income/tax bracket
You expect tax rates to increase in the future
You want tax-free income in retirement for flexibility
You don't want Required Minimum Distributions (RMDs)

Choose Traditional IRA if:

You're in a high tax bracket now and expect lower in retirement
You need the tax deduction to reduce current taxable income
You're over the Roth IRA income limits
You expect to be in a lower tax state in retirement

2024 IRA Rules

Contribution Limit: $7,000 per year ($8,000 if age 50+)
Roth Income Limits: Phase-out begins at $146,000 (single) / $230,000 (married)
Traditional Deduction: May be limited if you have a workplace retirement plan
Contribution Deadline: Tax filing deadline (typically April 15)
Penalty-Free Withdrawals: Age 59½ (Roth contributions can be withdrawn anytime)

IRA Planning Tips

Max It Out: Contribute the maximum each year if possible - time is your greatest asset.
Backdoor Roth: If over income limits, consider a backdoor Roth conversion.
Diversify Tax Exposure: Consider having both Roth and Traditional accounts for flexibility.
Start Early: Even small contributions early in life grow significantly over decades.
Review Annually: Reassess your IRA strategy as your income and tax situation changes.

Frequently Asked Questions

Can I convert Traditional IRA to Roth?

Yes, you can do a Roth conversion at any time. You'll pay income taxes on the converted amount that year, but future growth will be tax-free. This can be strategic in low-income years.

What if I don't know my retirement tax rate?

A common approach is to assume a similar or slightly lower rate than now. If uncertain, diversifying between Roth and Traditional hedges your bets against future tax rate changes.

Should I choose IRA over 401(k)?

Generally, contribute enough to your 401(k) to get the full employer match first (free money). Then consider maxing out an IRA for its investment flexibility and potentially lower fees. After that, return to the 401(k).

Is a 7% return realistic for an IRA?

The S&P 500 has historically returned about 10% annually before inflation, or 7% after inflation. While past performance doesn't guarantee future results, 7% is a commonly used moderate assumption for long-term planning.

Roth vs. Traditional IRA Calculator