Calzento

Roth vs Traditional — break-even framing

Most calculators ask "what's your retirement tax rate?" — which nobody can answer honestly. This one flips it: at what future tax rate are the two equivalent?If you think you'll be above that line in retirement, pick Roth. Below it, pick Traditional. Above/below by a wide margin? The decision matters. Close to it? Pick either.

Last updated 2026-05-13

Comparison mode
Same dollars going in.Apples-to-apples. Math reduces to: Roth wins iff your future tax rate > today's.
2026 caps: IRA $7,000 · 401(k) $23,000 (+ catch-up if 50+).
2026 federal brackets. Add ~5% for state if applicable.
Most retirees pay less than peak-earning years (lower income, no payroll tax). But tax brackets shift — a wide guess is fine; the break-even tells you which side of the line matters.
Mathematically equivalent by $0.After 30 years
Nominal balance at retirement
$661,226
Traditional, after-tax
taxed at 22% on withdrawal
$515,756
Roth, after-tax
pre-taxed at 22% going in
$515,756
The honest framing
The two are mathematically equivalent when future tax rate equals current rate — break-even at 22%. Above that, Roth wins; below, Traditional wins. The return rate and horizon don't affect which side wins (only the magnitude).
Methodology

Why the "break-even" framing is the honest one

The algebra: for the same paycheck-dollar, Traditional ends up at (1+r)t × (1 − tfuture) after withdrawal. Roth ends up at (1 − tnow) × (1+r)t(no tax on withdrawal). Setting them equal cancels the growth term — the answer doesn't depend on return rate or horizon, only on the two tax rates.

Why most calcs get this wrong:they ask for a future tax rate, the user picks something near today's rate, and the calc proudly reports a $50k Roth advantage that's actually just rounding error. Framing it as a break-even surfaces that the decision is fundamentally uncertain — and how uncertain it is.

The two modes:

Same-contribution mode(apples-to-apples). Same nominal $ goes into either account. This is the cleanest math but ignores the contribution-limit effect. Useful for comparing at percentages of salary where you're below the cap.

Maxing-out mode.Both accounts get the same cap (e.g., $7,000 IRA / $23,000 401(k)). The Roth contributor has to pay tax on top separately, so Roth shelters more economic value. In this mode Roth wins unless your future rate is near 0%. Only relevant if you're actually maxing the cap each year.

Default tax rate framing:we use 2026 federal brackets. Add ~5% if you're in a high-tax state for the "today" figure. At retirement, your effective state tax depends heavily on where you retire — Florida/Texas/Nevada/Washington have no state income tax; California/NY/NJ remain high.

What this calc doesn't model:RMDs on Traditional (force-withdraw rule starting at 73/75), Required Distributions don't apply to Roth IRAs (a quiet win for Roth as a legacy vehicle), Medicare IRMAA surcharges that kick in at high Traditional-withdrawal levels, the 5-year Roth seasoning rule, Pro-rata rules for Roth conversions when you have existing Traditional IRA balances, employer-side tax planning if you're self-employed. None change the break-even framing but they can shift the decision at the margins.

Decision heuristic:if you're early-career (low bracket now, likely higher later), Roth often makes sense. Mid-career peak earner expecting retirement-bracket drop → Traditional often makes sense. Splitting between both — "tax diversification" — is a reasonable hedge when you're genuinely unsure.

Related

401(k) match
First capture the full employer match — that decision dwarfs Roth-vs-Traditional.
Open →
Compound interest
The growth engine behind both accounts — see the curve before debating the wrapper.
Open →
State tax brackets
Add your state's marginal rate to today's federal to get the full picture.
Open →