Roth vs Traditional IRA Calculator 2025

A Traditional IRA offers tax-deductible contributions now, with tax-deferred growth, but withdrawals in retirement are taxed as ordinary income. A Roth IRA uses after-tax contributions (no immediate tax break), but the account grows tax-free and qualified withdrawals in retirement are completely tax-free.

The key difference is when you pay taxes: now (Roth) or later (Traditional). Think of it as choosing between a tax break today versus tax-free income in retirement. Use our Tax Bracket Calculator to understand your current bracket.

The best choice depends on your current vs. expected future tax situation:

• Choose Roth IRA if: You expect to be in a higher tax bracket in retirement, you're early in your career with lower current income, or you want tax-free withdrawals and no RMDs.
• Choose Traditional IRA if: You expect to be in a lower tax bracket in retirement, you need the tax deduction now, or you're in your peak earning years.

Many financial advisors recommend having both types for tax diversification in retirement. Learn more about tax planning strategies with our Federal Income Tax Calculator.

For 2025, the IRA contribution limits are:

• Under age 50: $7,000 maximum annual contribution
• Age 50 and older: $8,000 maximum (includes $1,000 catch-up contribution)

This limit applies to your combined contributions to both Traditional and Roth IRAs. You cannot contribute $7,000 to each; the total across all IRAs must not exceed the limit. The SEC's guide to retirement accounts provides additional context on account types.

Yes! You can contribute to both a Roth IRA and a Traditional IRA in the same year. However, your total combined contributions cannot exceed the annual limit ($7,000 for 2025, or $8,000 if you're 50+).

For example, you could split your contributions: $4,000 to a Traditional IRA and $3,000 to a Roth IRA. This strategy provides tax diversification, giving you both taxable and tax-free income sources in retirement.

Roth IRA contributions have income limits based on your Modified Adjusted Gross Income (MAGI):

• Single filers: Full contribution up to $150,000; phases out between $150,000-$165,000; no direct contribution above $165,000
• Married filing jointly: Full contribution up to $236,000; phases out between $236,000-$246,000; no direct contribution above $246,000

If your income exceeds these limits, consider a backdoor Roth IRA: contribute to a Traditional IRA (non-deductible) and then convert it to a Roth IRA. Calculate your adjusted gross income with our AGI Calculator. The FINRA IRA guide explains conversion strategies.

General withdrawal rules:

• Age 59 1/2: You can withdraw penalty-free from both Traditional and Roth IRAs
• Roth contributions: You can withdraw your contributions (not earnings) anytime without penalty
• Traditional IRA RMDs: You must begin Required Minimum Distributions at age 73
• Roth IRA: No RMDs during the owner's lifetime

Early withdrawals before 59 1/2 typically incur a 10% penalty plus taxes, with exceptions for first-time home purchase ($10,000), qualified education expenses, and certain medical situations. The CFPB explains RMD rules for retirement withdrawals.

The tax impact depends on the type of IRA:

• Traditional IRA: Contributions may be tax-deductible, reducing your adjusted gross income (AGI). Deductibility may be limited if you or your spouse have a workplace retirement plan.
• Roth IRA: Contributions are made with after-tax dollars, so there's no immediate tax benefit. However, you may qualify for the Saver's Credit which can reduce your tax bill.

Use our Federal Income Tax Calculator to see how IRA contributions might impact your overall tax liability.