Pay taxes now
or pay them later?
Traditional accounts let you invest pre-tax dollars and defer the tax bill until withdrawal. Roth accounts take the tax now but let your money grow and be withdrawn completely tax-free. Which is better depends almost entirely on one thing: your tax rate now vs. later.
The core difference
The math is simple
When the math is done correctly, Roth and Traditional produce identical after-tax wealth if your tax rate never changes. The entire choice reduces to: will you be in a higher or lower tax bracket in retirement?
Both simplify to $10,000 × 1.07³⁰ × (1 − rate). The only question is: which rate is lower — the one you pay now, or the one you pay later?
See which wins for your rates
Adjust your current and expected future tax rates to see which account type comes out ahead. The chart shows the after-tax value of $10,000 contributed today across multiple time horizons.
Beyond the basics: other reasons to choose Roth
Roth accounts have no Required Minimum Distributions. Traditional accounts force taxable withdrawals at 73 whether you need the money or not.
Roth IRA contributions (not earnings) can be withdrawn anytime, penalty-free. This makes them a flexible emergency backstop.
Having both types gives you flexibility to manage your taxable income in retirement — drawing from Roth in high-income years to stay in lower brackets.
Inherited Roth accounts grow and distribute tax-free. Inherited traditional accounts require heirs to pay ordinary income tax on every withdrawal.
The Roth conversion opportunity
Even if you have traditional savings today, you can convert them to Roth — paying the tax now to avoid larger taxes later. The best time is during the gap between retirement and when Social Security starts, when your income is at its lowest and tax brackets are most favorable.
- → You're retired but haven't started Social Security yet (income temporarily low)
- → You expect higher taxes in the future (either personally or from policy changes)
- → Your traditional balance is growing so fast that future RMDs will push you into high brackets
- → You want to leave a tax-advantaged inheritance for heirs
Optimize your conversion strategy
The Roth Conversion Optimizer models your specific situation — showing how much to convert each year to fill low tax brackets and minimize lifetime taxes.