IRA Calculator
Your details
Result
Balance at retirement
- After tax on withdrawal
- $552,596
- Roth would give
- $708,456
- Which wins
- Traditional, by $14,169
- Total contributed
- $225,000
- Investment growth
- $483,456
- Deduction saved, invested
- $170,029
- First RMD at 73
- $26,734
- Traditional comes out $14,169 ahead, because your rate falls from 24% now to 22% in retirement — you take the deduction at the higher rate and pay tax at the lower one. If the rates were equal the two would be identical.
- Of the $708,456 projected, $225,000 is money you put in and $483,456 is growth — 68% of the total. Over 30 years the compounding does most of the work, which is why starting early matters more than contributing more.
- Traditional IRAs require minimum distributions from age 73, whether or not you need the money, and each one is taxable income. On this balance the first would be about $26,734. Roth IRAs have no RMDs during the owner's lifetime, which is a genuine planning advantage separate from the tax-rate question.
Traditional versus Roth at different retirement rates
Your rate today is fixed at the figure you entered. Only the retirement rate changes down the column, and it is the only thing that decides the answer.
| Rate in retirement | Traditional, after tax | Roth | Better |
|---|---|---|---|
| 12% | $793,471 | $708,456 | Traditional by $85,015 |
| 22% (yours) | $722,625 | $708,456 | Traditional by $14,169 |
| 24% | $708,456 | $708,456 | Identical |
| 32% | $651,779 | $708,456 | Roth by $56,676 |
| 35% | $630,526 | $708,456 | Roth by $77,930 |
Sensitivity to the return assumption
The return matters more than the tax treatment over a long period.
| Annual return | Balance | Of which growth |
|---|---|---|
| 4% | $420,637 | $195,637 |
| 5% | $498,291 | $273,291 |
| 6% | $592,936 | $367,936 |
| 7% (yours) | $708,456 | $483,456 |
| 8% | $849,624 | $624,624 |
| 9% | $1,022,307 | $797,307 |
How much will my IRA be worth?
Contributing $7,500 a year to a traditional IRA for 30 years at a 7% return grows to about $708,456, of which $225,000 is contributions and $483,456 is growth. Withdrawals are taxed as income, so at a 22% rate that is $552,596 after tax.
FV = C × [(1 + r)ⁿ − 1] ÷ r + B(1 + r)ⁿ after tax = FV × (1 − retirement rate)- C
- Annual contribution
- r
- Annual return as a decimal
- n
- Years of compounding
- B
- Balance already in the account
The growth projection is a standard future-value annuity, and the interesting part of a traditional IRA is the tax treatment around it. Contributions may be deductible now, growth is untaxed along the way, and withdrawals are taxed as ordinary income — so the account defers tax rather than avoiding it. That leads to the result most people get wrong about traditional versus Roth. If your marginal rate is the same when you contribute as when you withdraw, the two are mathematically identical, to the cent, provided the traditional contributor also invests the tax deduction. Deducting $7,500 at 24% frees $1,800 a year; invest that alongside and the traditional outcome exactly equals the Roth one. The whole decision therefore reduces to a single comparison: will your rate be higher or lower in retirement than it is today? Lower favours traditional, higher favours Roth. Two things sit outside that symmetry. The deduction has to actually be invested rather than spent, which in practice is where Roth often wins. And traditional IRAs require minimum distributions from age 73 whether you need the money or not, while Roth IRAs have none during the owner's lifetime.
- Decide the annual contribution, up to the IRS limit.
- Multiply by the annuity factor for your return and years.
- Add any existing balance compounded over the same period.
- Multiply the result by one minus your retirement tax rate.
- Add the invested value of each year's tax deduction.
- Compare that total against the untaxed Roth balance.
Worked example: $7,500 a year for 30 years at 7%, a 24% rate now and 22% in retirement, deduction invested
$7,500 a year for 30 years at 7%, a 24% rate now and 22% in retirement, deduction invested
Thirty years of $7,500 contributions at 7% gives an annuity factor of 94.46, so the balance reaches $708,456. Only $225,000 of that is money you put in — the other $483,456, or 68% of the total, is growth, which is why the years matter more than the contribution size. Withdrawn at a 22% rate, the after-tax value is $552,596. That figure alone makes traditional look far worse than a Roth's tax-free $708,456, but the comparison is incomplete: deducting $7,500 at 24% saves $1,800 in tax every year, and invested at the same 7% that saving grows to $170,029. Adding it gives a traditional total of $722,625 against Roth's $708,456 — traditional ahead by $14,169, purely because the rate falls from 24% to 22%. Set both rates to 24% and the two come out at $708,456 each, identical to the cent. One asymmetry remains regardless: this balance would force a first required distribution of about $26,734 at age 73, where a Roth would force none.
What each ira input means
- Annual contribution
- The 2026 limit is $7,500, plus a $1,100 catch-up from age 50. The limit applies across all your IRAs combined, not per account.
- Current balance
- What is already in the account. It compounds for the whole period alongside new contributions.
- Years until retirement
- How long the money has to compound. This matters more than the contribution amount over long periods.
- Annual return
- A nominal annual return. Seven percent is a common planning assumption for a diversified portfolio before inflation, which has historically run around 2 to 3 percent.
- Your marginal tax rate now
- What the deduction is worth. A $7,500 deductible contribution at a 24% marginal rate reduces this year's tax by $1,800.
- Expected tax rate in retirement
- What withdrawals will be taxed at. This single comparison against your current rate decides traditional versus Roth — everything else is noise.
- Invest the tax deduction too
- The only way to compare traditional and Roth fairly. A traditional contributor keeps the tax saving; if it is spent rather than invested, Roth wins by default.
What this ira does not account for
- If your marginal rate is the same when contributing and withdrawing, traditional and Roth are mathematically identical — provided the traditional contributor invests the tax deduction rather than spending it.
- Deductibility of a traditional IRA contribution phases out by income when you or your spouse are covered by a workplace retirement plan. A non-deductible contribution changes the arithmetic entirely.
- The contribution limit applies across all your IRAs combined, traditional and Roth together. Excess contributions attract a 6% annual penalty until corrected.
- Traditional IRAs require minimum distributions from age 73 whether or not you need the money, and each is taxable income. Roth IRAs have no RMDs during the owner's lifetime.
- Withdrawals before age 59½ generally incur a 10% penalty on top of income tax, with limited exceptions for first-home purchase, higher education and certain medical costs.
- You need earned income to contribute, and a spousal IRA is the exception that allows a non-earning spouse to contribute against the earning spouse's income.
- The return figure is nominal, not real. At 2 to 3% inflation, a 7% nominal return is roughly 4 to 5% in purchasing power, and this projection does not adjust for that.
- Retirement tax rates are genuinely unknowable — they depend on future law as well as your own circumstances. Treating the comparison as precise is a mistake.
Frequently asked questions
How much can I contribute to an IRA in 2026?
$7,500, plus a $1,100 catch-up from age 50 for a total of $8,600. The limit applies across all your IRAs combined, traditional and Roth together, not per account.
Is a traditional or Roth IRA better?
It depends only on your tax rate now versus in retirement. A lower rate later favours traditional, a higher rate later favours Roth, and equal rates make them mathematically identical.
How much will $7,500 a year grow to in 30 years?
About $708,456 at a 7% annual return. Of that, $225,000 is contributions and $483,456 is growth — so roughly two thirds of the final balance comes from compounding.
Are traditional IRA contributions tax-deductible?
Often, but deductibility phases out by income if you or your spouse are covered by a workplace retirement plan. A non-deductible contribution removes the upfront benefit that the comparison depends on.
What are required minimum distributions?
Mandatory withdrawals from a traditional IRA starting at age 73, calculated from your balance and an IRS life-expectancy divisor. Each is taxable income. Roth IRAs have none during the owner's lifetime.
Can I withdraw from an IRA before retirement?
Yes, but withdrawals before 59½ generally incur a 10% penalty plus income tax. Exceptions exist for a first-home purchase, higher education and certain medical expenses.
Sources and review
“The limit on annual contributions to an IRA increased to $7,500, up from $7,000.”
401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 — Internal Revenue Service- Retirement topics — required minimum distributions (RMDs) — Internal Revenue Service
Last reviewed .