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Roth vs Traditional

Which account wins after tax if rates today and in retirement are different?

Your numbers

Roth advantage on the same paycheck

-$12,483

Traditional after-tax (same $ contributed)$97,368
Roth after-tax (same $ contributed)$124,831
Roth after-tax (same paycheck cost)$84,885

Tip. Educational estimate with the assumptions listed on this page. Not tax, legal, or investment advice.

Assumptions

  • One lump contribution compounds annually. No employer match.
  • Retirement withdrawals are taxed at a single marginal rate.
  • NIIT, IRMAA, and pro-rata Roth conversion rules are excluded.

Explore the numbers

Examples

Load a scenario, then change one input at a time.

Example 1

Peak earner

32% now, 22% later.

Roth advantage on the same paycheck

-$12,483

Example 2

Same bracket

24% both sides.

Roth advantage on the same paycheck

-$0.00

Example 3

Rising rate

22% now, 32% later.

Roth advantage on the same paycheck

$5,329

What this calculates

Compare Roth and Traditional future after-tax values for the same contribution and for the same paycheck cost.

How to use it

  1. Use current marginal rate, not effective rate.
  2. If you expect lower brackets in retirement, Traditional often wins on the same dollar.
  3. Read the same-paycheck row if Roth contributions come from after-tax cash.

Common mistakes

  • Comparing a $23k Roth with a $23k Traditional as equal paycheck cost.
  • Ignoring a match, which is usually pretax.
  • Using average tax rate in retirement for a large conversion year.

Formula

Traditional after-tax FV = FV × (1 − retirement rate). Same-paycheck Roth invests contribution × (1 − current rate).

FAQ

When is Roth obviously better?

When you expect a higher rate later, or you want tax-free flexibility and are paying tax from cash you would not have invested anyway.

What about backdoor Roth?

This is the growth comparison, not the pro-rata test.

Should high-income W-2s always pick Traditional?

Often for the deduction, then convert in lower-income years. It is a sequence, not a forever choice.

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