Chapter 04 · Keep more of it
Roth or Traditional: which leaves more after tax?
Both account types shelter growth from tax. They differ in when you pay: Traditional defers the tax to withdrawal, Roth pays it up front. Compare them for your own tax rates.
How the comparison works
You start with the same pre-tax pay in both cases. In a Traditional account all of it is invested and withdrawals are taxed at your future rate. In a Roth account you pay today's rate first and invest what is left; qualified withdrawals are tax-free. Because both accounts grow at the same rate, the winner depends only on the two tax rates, not on the return or the number of years: Roth wins when your future rate is higher than today's, Traditional wins when it is lower, and they tie when the rates are equal.
The table shows the after-tax result for a range of retirement tax rates using your other inputs; the row matching today's rate is the break-even.
What the numbers cannot tell you
- Your future rate is unknown. It depends on retirement income, where you live and tax law that can change.
- Contribution limits apply to dollars, not tax-equivalents. For 2026 the IRA limit is $7,500 combined and the 401(k) deferral limit is $24,500 (limits by account). A Roth dollar shelters more after-tax value than a Traditional dollar, which can matter if you can reach the limit.
- Roth IRA income limits. For 2026, single filers phase out between $153,000 and $168,000 of modified AGI.
- Tax brackets are published by the IRS each year: IRS federal income tax rates and brackets.
Next: see how brokers hold these accounts, or the FIRE calculator for taxes in retirement.
Illustration with your own assumptions, not a forecast or personal tax advice. Federal tax only.
Frequently asked questions
When does a Roth beat a Traditional account?
When the tax rate you pay on withdrawals is higher than the rate you pay on the contribution today. If both rates are equal and the money is invested the same way, the two end up with the same after-tax amount.
Why is the break-even simply 'same tax rate'?
Both accounts multiply the same pre-tax amount by the same growth factor. Traditional pays tax on the way out (1 − retirement rate), Roth paid it on the way in (1 − current rate). Equal rates give equal results; the growth rate and number of years scale both sides alike.
What does this calculator leave out?
State taxes, the Saver's Credit, Roth income limits, required minimum distributions (Traditional and 401(k) only), the 5-year rule, employer match treatment and changes to tax law. The comparison also assumes the Traditional tax saving is invested rather than spent.
Read more in the knowledge base
- Roth IRA vs Traditional IRA: how the choice works · 2026-11-10
Next · chapter 05
Financial freedom
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