IRA Calculator — Traditional vs Roth
Project the balance of a Traditional or Roth IRA at retirement, compare after-tax outcomes side-by-side, and see how the 2025 IRS contribution limits apply to you.
Roth IRA balance at retirement
£661,225.50
- Traditional IRA balance (after retirement tax)
- £515,755.89
- Roth IRA balance (tax-free)
- £661,225.50
- Roth advantage over Traditional
- £145,469.61
- Total contributed
- £210,000.00
- Investment growth
- £451,225.50
- Annual tax saving with Traditional
- £1,680.00
- Years until retirement
- 30
- Your annual contribution limit
- £7,000.00
Projects 30 years of $7000 annual contributions at 7% expected return using the ordinary-annuity formula FV = C · ((1+r)^n − 1) / r. Roth withdrawals are tax-free; Traditional withdrawals are taxed at your projected retirement rate (22%). Traditional wins if your current rate (24%) exceeds your retirement rate (22%); Roth wins if the reverse holds.
How to use this calculator
Enter your current age, the age you plan to retire, your planned annual IRA contribution, an expected annual return, and your marginal federal tax rate today and in retirement. The headline shows your Roth IRA balance at retirement (which is tax-free). The breakdown shows the equivalent after-tax balance of a Traditional IRA at the same contribution, plus the Roth advantage (or deficit) over Traditional. If you enter a contribution above the 2025 IRS limit ($7,000 under 50, $8,000 if 50+) the projection caps it and flags the over-limit in the explanation.
How the calculation works
The calculator uses the ordinary-annuity future-value formula FV = C × ((1+r)^n − 1) / r, where C is the annual contribution, r is the expected annual return, and n is years to retirement. Contributions are assumed to be made at the end of each year. The Roth balance is the gross future value (qualified Roth withdrawals are federally tax-free under IRC §408A). The Traditional after-tax balance is the gross future value multiplied by (1 − retirement tax rate), because Traditional withdrawals are taxed as ordinary income (IRC §408(d)). With equal contributions, Traditional wins when your current marginal rate is higher than your retirement rate; Roth wins when the reverse holds. The IRS contribution limits ($7,000 / $8,000 for 2025) are set in IRS Notice 2024-80.
Worked example
A 35-year-old contributes $7,000 per year for 30 years (to age 65) at a 7% expected return. Future value = 7,000 × ((1.07)^30 − 1) / 0.07 = 7,000 × 94.461 = $661,225. In a Roth IRA, the full $661,225 is available tax-free. In a Traditional IRA, with a 22% retirement tax rate, the after-tax balance is 661,225 × 0.78 = $515,756. The Roth advantage in this scenario is about $145,469. Total contributed over 30 years is $210,000; investment growth provides the remaining $451,225.
Frequently asked questions
What are the 2025 IRA contribution limits?
For 2025 the IRS limits IRA contributions to $7,000 if you are under 50, or $8,000 if you are 50 or older (the extra $1,000 is the catch-up contribution). The limit is a per-person aggregate across all Traditional and Roth IRAs — you can split between them but the combined total cannot exceed the limit. Source: IRS Notice 2024-80 (cost-of-living adjustments for 2025).
Should I choose Traditional or Roth IRA?
The classic rule: pick Traditional if your current marginal tax rate is higher than your expected retirement rate (so you deduct at a high rate and withdraw at a low rate), and pick Roth if your retirement rate will be higher (or you want tax diversification, no required minimum distributions during your lifetime, and the ability to leave tax-free money to heirs). Younger savers in low brackets often choose Roth; high earners near retirement often prefer Traditional. The calculator shows the cross-over directly: when the two after-tax balances are equal, the two rates are equal.
Can I deduct my Traditional IRA contributions?
Yes if you (and your spouse, if filing jointly) are not covered by a workplace retirement plan, regardless of income. If you are covered, the deduction phases out at higher modified adjusted gross incomes (MAGI). For 2025 single filers covered by a workplace plan, the phase-out is $79,000–$89,000; for married filing jointly with the contributor covered it is $126,000–$146,000; for MFJ where only the spouse is covered it is $236,000–$246,000 (IRS Pub 590-A, 2025). Above the upper end you can still contribute, but you get no deduction (a non-deductible Traditional IRA).
Who can contribute to a Roth IRA?
Roth IRA contributions phase out at higher MAGI. For 2025, single filers can contribute fully below $150,000 and not at all above $165,000 (a partial contribution in the band). Married filing jointly is $236,000–$246,000. Above the upper end, consider the "backdoor Roth" — a non-deductible Traditional IRA contribution followed by a Roth conversion (watch the pro-rata rule if you have other pre-tax IRA money). Source: IRS Pub 590-A, 2025.
Do Roth IRAs have required minimum distributions (RMDs)?
No. Roth IRAs never required RMDs during the owner's lifetime, and under SECURE 2.0 (effective 2024) Roth 401(k) accounts also no longer require lifetime RMDs. This is a key advantage of Roth: you can leave the money invested as long as you want, useful for estate planning. Traditional IRAs and 401(k)s do require RMDs starting at age 73 (born 1951–1959) or 75 (born 1960 or later) — see our RMD Calculator.
What return rate should I use?
A reasonable default is 7% nominal for a diversified stock-heavy portfolio (the long-run real return on US equities is about 7%; nominal returns including inflation have been closer to 10%, but real terms are more useful for retirement planning). Use 5–6% for a balanced 60/40 portfolio, and 3–4% for a conservative bond-heavy mix. Past performance is not a guarantee — sequence-of-returns risk near retirement can change the picture even when the average is on target.