Roth vs. Traditional IRA Planner

Decide which Individual Retirement Account (IRA) is best for your financial future by comparing their after-tax growth.

Tax Assumptions

Annual Contribution ($)

2024 Limit: $7,000 ($8,000 if 50+)

Current Tax Rate %

Retirement Tax %

Expected Return %

Growth Years

The general rule: If you expect to be in a lower tax bracket in retirement, Traditional is better. If higher, Roth is better.

Winner: Traditional IRA

Net After-Tax Wealth

Benefit Difference: $33,161

Roth IRA

$369,514

100% Tax-Free Withdrawals

Traditional IRA

$402,675

Taxed as Income in Future

Comparative Summary

Pre-Tax Account Growth$473,735

Total Tax Paid (Current Value)$38,500

Strategy WinnerTraditional Preferred

No RMDs with Roth

Roth IRAs do not require withdrawals during your lifetime.

Traditional vs. Roth IRA: Which One to Choose?

Both accounts offer massive tax advantages, but they differ in when you get the tax break.

1. Traditional IRA (Tax Now)

Contributions to a Traditional IRA are often tax-deductible in the year you make them. This lowers your taxable income today. However, your money is taxed as ordinary income when you withdraw it in retirement.

2. Roth IRA (Tax Later)

You contribute to a Roth IRA with after-tax dollars (no immediate deduction). The trade-off is that all qualified withdrawals in retirement—including all the growth and dividends—are 100% tax-free.

3. The Retirement Tax Bracket Guess

The choice usually depends on your tax rate:

Choose Traditional if you expect to be in a lower tax bracket when you retire.
Choose Roth if you expect to be in a higher tax bracket when you retire (or if you want to hedge against rising future tax rates).

Contribution Limits (2024)

The 2024 contribution limit for both accounts combined is $7,000. If you are 50 or older, you can contribute up to $8,000 (including a $1,000 catch-up contribution).

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