Retirement Calculator: Traditional vs Roth 401k & IRA Comparison | bankrewards.io
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Retirement Calculator: Traditional vs Roth

May 23, 2025

Calculator
Retirement
401k
IRA
Roth
Traditional
Tax Planning

Traditional vs Roth: The Ultimate Retirement Decision

Understanding the key differences between traditional and Roth retirement accounts

The Power of Tax-Advantaged Accounts

Retirement accounts offer incredible tax advantages that can dramatically impact your financial future. The choice between traditional and Roth accounts is fundamentally about when you pay taxes: now or later. This calculator helps you model both scenarios to determine the optimal strategy for your situation.

Key Differences

  • Traditional 401k/IRA: Contributions are tax-deductible now, but withdrawals in retirement are taxed as ordinary income
  • Roth 401k/IRA: Contributions are made with after-tax dollars, but withdrawals in retirement are completely tax-free
  • Required Minimum Distributions (RMDs): Traditional accounts require withdrawals starting at age 73, while Roth accounts have no RMDs
  • Contribution Limits: Both have annual limits, with catch-up contributions allowed for those 50 and older
  • Income Limits: Roth IRAs have income limits for eligibility, while traditional IRAs and 401ks generally don't

2024 Contribution Limits

401k Limits
  • Under 50: $23,000
  • 50 and older: $30,500 (includes $7,500 catch-up)
  • Total with employer match: Up to $69,000 (under 50)
IRA Limits
  • Under 50: $7,000
  • 50 and older: $8,000 (includes $1,000 catch-up)
  • Roth IRA income limits apply

Which Should You Choose?

The optimal choice depends on your current tax situation vs. your expected tax situation in retirement:

Consider Traditional If:
  • You're in a high tax bracket now
  • You expect to be in a lower bracket in retirement
  • You need the immediate tax deduction
  • You're maximizing current tax savings
Consider Roth If:
  • You're in a lower tax bracket now
  • You expect higher taxes in retirement
  • You want tax-free retirement income
  • You want to avoid RMDs

Calculator Inputs

Adjust the values below to match your specific retirement planning situation

Results: Retirement Projections

Based on your inputs, here's how your retirement accounts will grow

Traditional 401k/IRA

Balance at Retirement: $2,752,530.97
Account Breakdown:
Total Contributions: $525,000.00
Investment Growth: $2,227,530.97
Tax Savings (While Working): $113,400.00
Retirement Tax Impact:
Required Min. Distribution (RMD): $112,808.65
Pre-Tax Balance: $2,752,530.97
Less: Taxes (20%): -$550,506.19
After-Tax Value: $2,202,024.78

Roth 401k/IRA

Balance at Retirement: $1,101,012.39
Account Breakdown:
Total Contributions: $210,000.00
Investment Growth: $891,012.39
Tax-Free Withdrawals: 100%
Retirement Tax Benefits:
No RMDs Required: ✓
Account Balance: $1,101,012.39
Less: Taxes (0%): -$0.00
After-Tax Value: $1,101,012.39

Combined Retirement Picture

Total Portfolio Value: $3,853,543.36
Total After-Tax Value: $3,303,037.17
Annual Social Security (After-Tax): $21,607.50
Annual Income Capacity (4% Rule): $153,728.99
Income Replacement: 192.2%
Annual Shortfall: $0.00

Outlook

Great job! Your retirement savings are on track to provide 192.2% of your current income. You're projected to have $153,728.99 in annual retirement income.

Ready to Start Investing for Retirement?

Choose the right brokerage account to maximize your retirement savings. Compare top investment platforms, fees, and features to find the perfect match for your retirement strategy.

Compare traditional and Roth 401k providers, and other investment options

Retirement Account Growth Projection

This chart shows your projected account balances over time. The red line shows traditional accounts, green shows Roth accounts, and blue shows your total portfolio.

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