Project how your Roth IRA will grow with tax-free compounding. Enter your current age, contribution amount, and expected return — then compare your after-tax outcome against a Traditional IRA to see which strategy puts more money in your pocket at retirement.
Pro tip: If you’re early in your career and in a lower tax bracket, a Roth IRA is almost always the better choice. You pay taxes now at a low rate and withdraw tax-free when your income (and tax bracket) is likely higher.
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Check if your income allows direct Roth IRA contributions based on 2026 MAGI phase-out limits.
Model pro-rata rule impact for backdoor Roth conversions if you have existing Traditional IRA balances.
The IRS allows an additional $1,000/year in catch-up contributions starting at age 50, bringing the max to $8,000.
Roth IRA vs Traditional IRA: Which Is Better for You?
The Roth IRA and Traditional IRA are both powerful retirement savings vehicles, but they handle taxes in opposite ways. With a Roth IRA, you contribute money that has already been taxed — your contributions do not reduce your taxable income in the year you make them. The tradeoff is significant: every dollar in your Roth grows tax-free, and qualified withdrawals in retirement are completely free of federal income tax. A Traditional IRA, on the other hand, may allow you to deduct contributions from your taxable income today, giving you an immediate tax break. However, you pay ordinary income tax on every dollar you withdraw in retirement, including all the growth your investments earned over the decades.
The core question is whether you expect your tax rate to be higher or lower in retirement compared to today. If your current rate is lower — common for younger workers early in their careers — paying taxes now through a Roth locks in that lower rate permanently. If you are in your peak earning years and expect to drop into a lower bracket once you stop working, the Traditional IRA’s upfront deduction may save you more over your lifetime. Many financial planners suggest holding both account types for tax diversification, giving you flexibility to choose which account to draw from each year based on your tax situation in retirement.
Roth IRA Contribution Limits (2026)
The IRS sets annual caps on how much you can contribute to a Roth IRA. For 2026, the standard contribution limit is $7,000 for individuals under age 50. If you are 50 or older, you qualify for an additional $1,000 catch-up contribution, bringing your total annual limit to $8,000. These limits apply to your combined contributions across all Traditional and Roth IRAs — you cannot contribute $7,000 to each; the total across all your IRA accounts cannot exceed the annual cap.
Contribution limits are adjusted periodically for inflation, and historically they have increased in $500 increments every few years. Your contributions must come from earned income such as wages, salaries, or self-employment income. Investment income, rental income, and Social Security benefits do not count. If your earned income for the year is less than the limit, your maximum contribution is capped at your total earned income.
The Power of Tax-Free Growth
Compound interest is often called the eighth wonder of the world, and a Roth IRA supercharges it by removing taxes from the equation entirely. Consider a 30-year-old who contributes $7,000 per year to a Roth IRA earning 7% annually until age 65. After 35 years, that account would grow to approximately $1,065,000 — and every dollar of it is accessible tax-free. Of that total, only $245,000 came from contributions; the remaining $820,000 is pure investment growth that will never be taxed.
By contrast, the same scenario in a Traditional IRA would produce the same gross balance, but withdrawals would be taxed as ordinary income. At a 22% tax rate in retirement, that $1,065,000 shrinks to roughly $830,000 in after-tax purchasing power. The Roth advantage grows even larger if your retirement tax rate climbs — a realistic possibility given that tax rates have historically fluctuated and government spending obligations continue to grow. Starting early maximizes this advantage because each additional year of compounding multiplies the tax-free growth that accumulates on top of previous growth.
Roth IRA Income Limits and the Backdoor Roth Strategy
Not everyone can contribute directly to a Roth IRA. The IRS imposes income limits based on your Modified Adjusted Gross Income (MAGI). For 2026, single filers begin to see their contribution limit phase out at $150,000 MAGI and are fully ineligible above $165,000. Married couples filing jointly face a phase-out range from $236,000 to $246,000. If your income falls within the phase-out range, your maximum contribution is proportionally reduced.
High earners who exceed these limits often use a backdoor Roth strategy: contribute to a non-deductible Traditional IRA (which has no income limit), then convert that balance to a Roth IRA. The conversion is legal and well-established, but beware of the pro-rata rule — if you hold any pre-tax money in Traditional IRA accounts, a portion of your conversion will be taxable based on the ratio of pre-tax to after-tax balances across all your Traditional IRAs. To avoid this tax complication, many advisors recommend rolling any existing Traditional IRA balances into an employer 401(k) before executing the backdoor conversion.
When Does a Traditional IRA Beat a Roth IRA?
Despite the appeal of tax-free withdrawals, a Traditional IRA can be the stronger choice in certain situations. If you are currently in a high tax bracket (32% or above) and confidently expect to be in a significantly lower bracket in retirement, the upfront tax deduction from a Traditional IRA saves you more today than the Roth’s tax-free withdrawals would save you later. The math is straightforward: if you pay 32% tax on Roth contributions today but would only pay 12% on Traditional IRA withdrawals in retirement, the Traditional approach keeps 20 cents more of every dollar you invest.
Additionally, if you expect to have a modest retirement income — perhaps because you plan to live frugally, relocate to a low-cost area, or rely primarily on Social Security — your effective tax rate on Traditional IRA withdrawals could be very low or even zero thanks to the standard deduction. In 2026, a married couple filing jointly can withdraw up to roughly $30,000 from a Traditional IRA completely tax-free after applying the standard deduction. Use the tax rate inputs above to model your specific scenario and see which account type delivers more after-tax wealth at your target retirement age.
Want to project your employer-sponsored retirement savings too? Try our 401(k) Calculator for employer matching and salary growth modeling. See all Personal Finance tools for more retirement and investment calculators.