Mississippi roth vs traditional calculator

One question in disguise

Every comparison of these two accounts eventually reduces to the same thing: will your tax rate be higher now or later. If it will be lower later, the traditional deduction is worth more than tax-free growth. If it will be higher later, the Roth is. Everything else on this page is detail hanging off that one judgement.

The mechanics are simple enough to state in two lines. A traditional contribution is deducted from income now and the whole withdrawal is taxed later. A Roth contribution comes out of already-taxed income and qualified withdrawals are not taxed at all. The IRS publishes a side-by-side comparison chart of the two, and the underlying rules for IRAs are set out in its Traditional and Roth IRAs page.

If your rate is genuinely identical in both periods, the two are mathematically equivalent on the same net contribution. They stop being equivalent the moment the rates differ, which they almost always do.

How the tool computes it

It grows your annual contribution as a monthly amount at the return you entered, for the years you entered. Then it applies your retirement tax rate to the traditional balance, leaves the Roth balance alone, and reports the difference. It also reports the extra tax you pay today to fund the Roth, which is the contribution multiplied by your current rate.

A worked example on the defaults

The defaults are $7,000 a year, 25 years, a 7% return, a 24% rate now and a 22% rate later.

The $7,000 default is close to a recent IRA limit, but the actual annual limit is indexed and moves. Check the current figure in our IRA contribution limits guide or the 401(k) limits guide, and against the IRS page listed in the sources, before you rely on it.

Why does Roth always look like it wins here?

Because the comparison holds the gross contribution constant, and that quietly favours the Roth.

Putting $7,000 into a Roth costs you more than putting $7,000 into a traditional account. At a 24% rate, the traditional contribution comes with a $1,680 deduction, so the same out-of-pocket cost buys either $7,000 of Roth or $7,000 of traditional plus $1,680 in your pocket. The tool asks what you do with that $1,680, because the answer changes the result more than either tax rate does.

Follow it through on the defaults. Answer yes and the $1,680 a year is invested at the same 7% in a taxable account, where its gain is taxed at the 15% long-term capital gains rate, and the traditional route comes to $471,281 against the Roth's $472,542. The two are effectively level, which is what you would expect when the rate now (24%) and the rate later (22%) are close. Answer no and the traditional route is worth $368,583, so Roth wins by $103,959. Nothing about the accounts changed between those two runs. Only what you did with the deduction changed, and most people spend it.

A second run, at a higher rate today

Change one field and the answer flips. Keep $7,000 a year, 25 years, a 7% return and a 22% retirement rate, then set the rate now to 32% with the deduction invested:

This is the case the traditional account is built for: a high rate today, a lower one later, and a deduction large enough that investing it matters. A ten point spread between the rates produces a $32,972 advantage over 25 years, about 7% of the balance. Real, and smaller than most people expect from a decision this heavily debated.

One line is worth noticing. If the deduction is spent rather than invested, the traditional route lands at $368,583 in this run too, exactly as it did on the defaults, and the Roth is ahead by $103,959 again. Your rate today has no effect on that column, because a deduction you spend leaves nothing behind to grow.

When is your tax rate likely to be lower later?

Nobody knows. But some patterns are more defensible than guessing:

• Higher later is plausible if you are early in your career, currently in a low bracket, expect substantial income growth, or expect to retire with large taxable withdrawals and a pension.
• Lower later is plausible if you are at peak earnings now, in a high bracket, and expect a retirement funded partly by Social Security and a paid-off house.
• Genuinely unknown describes most people, and splitting contributions between both account types is the usual hedge. It is not optimal under any single forecast, and it is not wrong under any of them either.

Where you live matters too. Retiring from a high-tax state to one that does not tax income can flip the answer on its own, and the tool ignores state tax entirely. Federal rates are only half the picture: see our 2026 federal tax brackets for what the rate you type in actually means, and the full Roth vs traditional guide for how to reason about the forecast.

What the arithmetic does not price

Flexibility. Roth contributions, the money you put in rather than the growth, can be withdrawn at any time without tax or penalty. That is worth something to anyone whose plan might change, and it is worth a great deal to someone retiring early. The growth does not share that treatment.

Required minimum distributions. Traditional balances are eventually subject to required minimum distributions in retirement. A Roth IRA is not subject to them during the owner's lifetime, which changes how the money can be left alone or passed on.

Deductibility limits. A traditional IRA deduction can be reduced or removed if you or a spouse are covered by a workplace plan and your income is above the phase-out. A Roth IRA has income limits of its own. Both thresholds are indexed annually, so check the IRS figures for the year in question rather than a number from an article.

What the two rate fields really assume

The retirement rate field takes one flat percentage, and a real retirement is not taxed that way. Withdrawals fill the brackets from the bottom up, so a household drawing from a traditional account pays nothing on the part covered by the standard deduction, then the lowest rate, and reaches the marginal rate only on the top slice. The effective rate is usually lower than the marginal one you typed in, and every point of that gap favours the traditional account. Our tax section sets out how the brackets stack.

The rate you enter for today should be the marginal one, because that is the rate the deduction is actually worth. It is the rate on the last dollar of income, not the average across your return, and the two are commonly confused.

One more assumption sits in the invested deduction. Its gain is taxed at 15%, the long-term capital gains rate most filers face. A filer in the 0% band keeps more and the traditional route looks better. A filer at 20%, or one paying state tax on the gain, keeps less. The 15% figure is a reasonable middle, not a description of your return.

Actually investing the deduction is harder than agreeing to

The tool's yes and no is a clean question with a messy answer, because the deduction never arrives as a transfer you can point at. On a 401(k) it is invisible: the contribution comes out of pay before tax, so the benefit shows up as a slightly smaller drop in take-home pay and nothing else. On a deductible IRA contribution it arrives months later as a smaller tax bill or a larger refund, by which time it has usually been absorbed.

If you choose traditional on the strength of the deduction, set up the investment of it as a standing instruction on the day you set up the contribution. Answering yes in the tool and no in practice is what produces the $103,959 column rather than the $1,261 one.

The mistake people make with this comparison

They optimise it. This is a decision with two plausible answers, a difference measured in single-digit percentages of the final balance under most realistic assumptions, and inputs nobody can forecast 25 years out. The contribution rate matters more than the account type by a wide margin, and someone who spends six months deciding while contributing nothing has made the only genuinely wrong choice available.

Where this comparison stops being reliable

From the tool's own caveats:

• This is one question wearing a disguise: will your tax rate be higher now or later. Everything else follows from that.
• The comparison assumes you invest the same gross amount either way. Traditional frees up the deduction to invest as well, and if you actually do, the gap narrows.
• It ignores state income tax, which can flip the answer if you retire somewhere that does not levy it.
• The invested deduction is held in a taxable account and its gain is taxed at 15%, the long-term capital gains rate most filers pay. A higher or lower bracket moves the answer.
• It assumes one flat rate in retirement. Real withdrawals are taxed through brackets, so the effective rate is usually lower than the marginal one entered here.
• Roth contributions can be withdrawn at any time without penalty. The growth cannot. That flexibility is worth something this arithmetic does not price.

Nothing here is tax advice for your situation. See the disclaimer and the rest of the tools in the calculator index.

A checklist

• Look up your current marginal rate rather than guessing at it.
• Write down why you expect your retirement rate to be higher or lower.
• Include state income tax in both figures, now and later.
• Check the current year's contribution limit and any income phase-out at the IRS.
• If you choose traditional, set up the investment of the deduction as well.
• Revisit the split whenever your income changes bracket.