Roth vs Traditional IRA Calculator

Make an informed decision between Roth and Traditional IRAs with our comprehensive comparison calculator. Analyze immediate tax benefits, long-term growth potential, income restrictions, and retirement withdrawal strategies to determine which IRA type aligns best with your financial goals and tax situation.

IRA Comparison Calculator

Personal Information
Income and Tax Information
IRA Contribution Details
2025 limit: $7,000 (under 50) or $8,000 (50+)

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How to Use This Calculator

  1. Enter Personal Information: Input your current age, retirement age, and filing status to establish the calculation timeframe and applicable limits.
  2. Provide Income and Tax Details: Enter your annual income, current tax bracket, expected retirement tax rate, and whether you have workplace retirement plan coverage.
  3. Set IRA Contribution Parameters: Choose your annual contribution amount (within legal limits), expected contribution growth, and investment return assumptions.
  4. Review Eligibility Status: Check if you're eligible for Roth IRA contributions and Traditional IRA deductions based on income limits.
  5. Compare Side-by-Side Results: Analyze immediate tax benefits, projected account values, after-tax values, and total taxes paid for both IRA types.
  6. Read the Recommendation: Review our algorithm's suggestion based on your specific financial situation and tax considerations.
  7. Examine Growth Projections: Use the interactive chart to visualize how both accounts would grow over time until retirement.

Understanding IRA Types and Tax Implications

Individual Retirement Accounts (IRAs) are powerful tax-advantaged savings vehicles, but the choice between Roth and Traditional IRAs significantly impacts your tax strategy and retirement outcomes. Traditional IRAs provide immediate tax deductions on contributions, reducing your current taxable income, but all withdrawals in retirement are taxed as ordinary income. Roth IRAs use after-tax dollars with no immediate deduction, but qualified withdrawals including all growth are completely tax-free.

The optimal choice depends on several factors: your current tax bracket versus expected retirement tax bracket, income eligibility limits, time horizon until retirement, and overall tax diversification strategy. Young investors in lower tax brackets often benefit from Roth IRAs, while those in peak earning years may prefer Traditional IRA deductions. Our calculator considers all these variables plus contribution limits, income phase-outs, and long-term growth projections to provide personalized recommendations.

2025 IRA Rules and Contribution Limits

For 2025, the IRA contribution limit is $7,000 for individuals under 50, with an additional $1,000 catch-up contribution allowed for those 50 and older, bringing their total to $8,000. These limits apply to your combined contributions across all Traditional and Roth IRAs. Roth IRA contributions phase out for single filers with modified adjusted gross income (MAGI) between $146,000 and $161,000, and for married filing jointly between $230,000 and $240,000.

Traditional IRA deduction eligibility depends on whether you're covered by a workplace retirement plan. Without workplace coverage, Traditional IRA contributions are fully deductible regardless of income. With workplace plan coverage, deductions phase out for single filers between $77,000-$87,000 MAGI and married joint filers between $123,000-$143,000 MAGI. Understanding these rules is crucial for maximizing your IRA benefits and avoiding contribution penalties.

Frequently Asked Questions (FAQ)

FAQ Index

For 2025, the IRA contribution limit is $7,000 for individuals under 50. Those aged 50 and older can make additional catch-up contributions of $1,000, bringing their total to $8,000. These limits apply to both traditional and Roth IRAs combined.

Traditional IRAs offer immediate tax deductions on contributions, but withdrawals in retirement are taxed as ordinary income. Roth IRAs use after-tax dollars with no immediate deduction, but qualified withdrawals including growth are tax-free. Traditional IRAs have required minimum distributions at 73, while Roth IRAs have no RMDs during the owner's lifetime.

For 2025, Roth IRA contributions phase out for single filers with modified adjusted gross income (MAGI) between $146,000 and $161,000. For married filing jointly, the phase-out range is $230,000 to $240,000. Above these limits, direct Roth IRA contributions are not allowed, though backdoor Roth conversions may be an option.

If you're covered by a workplace retirement plan like a 401(k), your Traditional IRA deduction phases out at higher income levels. For 2025, single filers lose the deduction between $77,000-$87,000 MAGI, while married joint filers lose it between $123,000-$143,000. Without workplace coverage, Traditional IRA contributions are fully deductible regardless of income.

Younger investors often benefit more from Roth IRAs because they typically have lower current tax rates and decades for tax-free growth. They also have flexibility to withdraw contributions penalty-free and no required minimum distributions. However, if you're in a high tax bracket now and expect lower rates in retirement, a Traditional IRA might be better.

Yes, you can convert Traditional IRA funds to a Roth IRA at any time, but you'll owe income tax on the converted amount. This is called a Roth conversion. There's no limit on conversion amounts, and it can be strategic during years with lower income. The backdoor Roth strategy uses conversions for high-income earners who can't contribute directly to Roth IRAs.