Roth vs Traditional

Find out which one wins for your tax situation.

Works for any account type — 401(k), IRA, or otherwise.

Your Numbers

$
The pre-tax dollar amount you're deciding where to put.
%
Your tax bracket today.
%
Your best guess at your bracket when you withdraw.
%
Historical real stock return average is ~7%.
years
How long the money stays invested.

Traditional vs Roth

Traditional

Goes In (pre-tax)Full amount invested — no tax paid today.—
Grows To (pre-tax)—
After-Tax Value at WithdrawalTaxed at your retirement rate when you withdraw.—

Roth

Goes In (after-tax)Tax paid today, at your current rate, before it goes in.—
Grows To—
Value at WithdrawalNo tax owed — you already paid it going in.—
Better Option
—
Difference (After-Tax): —

How much more the winning option is worth, after tax, at withdrawal.

Roth vs. Traditional: After-Tax Value

The Key Insight

If your tax rate is exactly the same now and in retirement, Traditional and Roth give you the identical after-tax result — try setting both tax rates to the same number above to see it. The real decision isn't 'which account type is better,' it's 'will my tax rate go up or down?' Roth wins if you expect a higher rate later. Traditional wins if you expect a lower rate later.

Assumptions

Assumes the same pre-tax contribution capacity either way and identical investment returns in both account types. Real-world contribution limits are the same nominal dollar amount for Traditional and Roth, which effectively lets a Roth shelter more in pre-tax-equivalent terms — a nuance this simple model doesn't capture.

Estimates for illustration only.

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