Roth IRA vs. Traditional IRA
A side-by-side comparison of the two main tax-advantaged retirement accounts in the United States.
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Traditional IRA
Contributions are made with **pre-tax dollars** (meaning they are tax-deductible in the year you make them). Earnings grow tax-deferred, but all withdrawals during retirement are taxed as ordinary income.
- Tax Timing: Pay taxes later (during retirement).
- Immediate Benefit: Deduct contributions to lower this year's taxable income.
- Best If: Your tax bracket will be lower in retirement than it is now.
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Roth IRA
Contributions are made with **post-tax dollars** (meaning you receive no immediate tax deduction). However, your investments grow 100% tax-free, and all qualified withdrawals in retirement are completely tax-free.
- Tax Timing: Pay taxes now (when you contribute).
- Retirement Benefit: Withdrawals of principal & gains are 100% tax-free.
- Best If: Your tax bracket will be higher in retirement than it is now.
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax Deduction | Yes (reduces current tax bill) | No (contributed post-tax) |
| Retirement Withdrawals | Taxed as ordinary income | 100% Tax-Free |
| Required Minimum Distributions (RMDs) | Required starting at age 73 | None during owner's lifetime |
| Contribution Rules | Anyone with earned income can contribute | Subject to income limits (phases out at higher incomes) |
Interactive IRA Strategy Comparison
Model your custom tax scenarios below to see which account yields the highest retirement value.
Advantage Winner
Roth IRA Wins
Roth IRA Net Value
$1,037,682.00
Traditional Net Value
$882,029.70
Portfolio Projections
Contribution Tax Savings
Annual Tax Saved (Traditional)$1,540.00 / yr
Cumulative Lifetime Tax Savings$53,900.00