Financial Calculators

Roth vs Traditional IRA & 401k Calculator

Compare pre-tax and Roth IRA/401(k) balances. Calculate compound interest, employer matching, Roth conversion taxes, and find your optimal retirement path.

Formula Verified & Maintained by:David Miller, CPA

CPA, M.S. Finance (NYU Stern) • Lead Financial Analyst & Tax Technology Editor

Peer-Reviewed AlgorithmAudited for 2026 Rules

Interactive Calculator

1. Provide Details

Account Type

Your Annual Contribution ($)

Employer Match % (For 401k)

Years to Retirement

Expected Annual Return (%)

Current Income Tax Rate (%)

Retirement Income Tax Rate (%)

Traditional Balance to Convert to Roth ($)

2. Output Results

Your Total Contributions162500.00 $

IRA Traditional Net (After Tax)349450.93 $

IRA Roth Net (Tax-Free Payout)411118.75 $

Conversion Tax Due Now0.00 $

Total Tax Savings Today (Traditional)35750.00 $

How to Calculate: Formula & Steps

Traditional plans defer taxes until withdrawal, while Roth plans are funded with post-tax dollars to allow tax-free growth. Employer matching is added to the traditional pre-tax portion.

Formula Used:

FV = Contribution × [((1 + r)^n - 1) / r]; Traditional Net = FV × (1 - Retirement Tax); Conversion Tax = Balance × Current Tax

Step-by-Step Calculation Example

Contributing $6,500 annually at 7% for 25 years yields $411,114. Traditional is taxed at retirement, Roth is tax-free. Converting a $50k Traditional IRA at a 22% tax rate triggers $11,000 in tax due today.

Common Mistakes to Avoid

Assuming Roth is always superior without calculating tax bracket shifts.
Not maximizing contributions early to exploit compound interest.
Forgetting to pay Roth conversion taxes from outside the account (paying it from the IRA triggers early withdrawal penalties).

Practical Use Cases

Retirement planning
Investment comparisons
Roth conversion tax planning
401k match modeling

Expert Tips

If you are currently in a low tax bracket, Roth is usually the best choice.
Always contribute at least enough to capture your full employer 401(k) match—it is free money.
If doing a Roth conversion, make sure you have cash reserves in a regular bank account to pay the conversion tax.

Roth vs. Traditional IRA / 401(k): Tax Timing & Conversion Math

The fundamental difference between Traditional (Pre-Tax) and Roth (Post-Tax) retirement accounts comes down to when income taxes are paid: today vs. at retirement.

Traditional IRA / 401(k) Mechanics

Contributions are tax-deductible today, lowering your current taxable income. Growth is tax-deferred, and withdrawals in retirement are taxed as ordinary income at your future tax rate.

Roth IRA / 401(k) Mechanics

Contributions are made with post-tax dollars (no upfront tax deduction). All capital gains, dividends, and compound growth compound 100% tax-free, and qualified withdrawals after age 59½ are completely tax-free.

The Roth Conversion Tax Formula

Conversion Tax Due = Converted Traditional Pre-Tax Balance × Current Marginal Income Tax Rate

Critical Strategy: Always pay the conversion tax using external non-retirement cash reserves. Withholding taxes from the conversion amount reduces the compounding principal and triggers a 10% early withdrawal penalty if under age 59½.

Disclaimer

This calculation tool is provided for educational and informational estimation purposes only. Results are based on mathematical formulas and user-supplied parameters. They do not constitute formal underwriting, financial, tax, engineering, or legal determinations.

Frequently Asked Questions About Roth vs Traditional IRA & 401k Calculator

What is the difference between a Roth and Traditional retirement account?

Traditional accounts are funded with pre-tax dollars, lowering your taxable income today, but withdrawals are taxed at retirement. Roth accounts are funded with post-tax dollars, meaning no tax deduction today, but all future compound interest, growth, and withdrawals are 100% tax-free.

Does a Roth IRA earn interest or grow?

A Roth IRA is an investment container (not a single interest-bearing account like a bank CD). Within the IRA, you invest in assets like stock index funds, mutual funds, or bonds. The account grows through compound interest, capital gains, and dividend payouts, which are entirely tax-free.

What is a Roth conversion, and how are the taxes calculated?

A Roth conversion is transferring assets from a Traditional (pre-tax) IRA or 401(k) to a Roth (post-tax) IRA. Because these funds have never been taxed, the entire converted amount is added to your taxable income for the year, and taxes are due at your current income tax rate. For example, converting $50,000 in a 22% tax bracket costs $11,000 in conversion taxes.

How does employer matching work in a Traditional vs. Roth 401(k)?

If you select a 401(k), employers can match your contributions (e.g. 50% match up to 6%). Historically, all employer matching funds must go into a Traditional pre-tax account, which will be taxed upon withdrawal. Even if you contribute to a Roth 401(k), the matched portion usually grows pre-tax in a traditional sleeve.

What is a good rate of return for an IRA?

Historically, the average rate of return for a balanced stock market index fund (like the S&P 500) inside an IRA is roughly 7% to 10% per year, adjusted for inflation, over a long-term (20+ year) horizon.