The honest way to compare Traditional and Roth
The decision turns mostly on one question: will your marginal tax rate be higher or lower in retirement than it is today? Pay tax when your rate is lowest. If your rate falls enough in retirement, Traditional wins; if it rises, Roth wins. And because the reinvested deduction is taxed on its gains along the way, a tie in tax rates leans slightly to Roth.
The catch most calculators miss: a Traditional contribution hands you a tax deduction now. If you simply pocket that, the two paths cost different amounts out of pocket and Roth looks better than it is. This tool invests the deduction in a taxable side account (and taxes its gains), so both paths cost the same — a true apples-to-apples result.
Frequently asked questions
- Should I choose Traditional or Roth?
- It mainly comes down to your tax rate now versus in retirement. If you expect a lower rate in retirement, Traditional tends to win; if higher, Roth. This tool also reinvests the Traditional tax deduction so the comparison is fair.
- Why does this calculator add a side account?
- A Traditional contribution gives you a tax deduction today. Spending that windfall makes Roth look artificially better. The honest comparison invests the deduction in a taxable account, which this tool does and then taxes its gains.
- What retirement tax rate should I use?
- Estimate your future marginal rate from expected retirement income and current law. It is genuinely uncertain, so try a few values and see how the answer shifts.
This calculator is for educational purposes only and does not constitute financial, tax, or investment advice. It assumes constant return and tax rates, annual contributions, and capital-gains tax applied once at the end; it does not model contribution limits, RMDs, tax brackets, or state tax. Estimates, not guarantees.