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Roth IRA vs. Traditional IRA: Compare the Same Savings Budget

Compare what leaves your spending budget today with what you can spend later. A larger pretax balance is not automatically a larger retirement benefit.

By Steven, Founder · Published October 26, 2026 · Updated October 26, 2026

Short answer

  • First check whether a traditional contribution is deductible and a direct Roth contribution is allowed.
  • Equal savings cost requires accounting for the traditional IRA tax deduction.
  • The 2026 IRA limit is shared across traditional and Roth IRAs, not granted separately to each.

Establish eligibility before comparing growth

For 2026, the general IRA contribution limit is $7,500, plus a $1,100 catch-up at age 50 or older, subject to compensation requirements. Splitting $7,500 between Roth and traditional IRAs does not create another $7,500 allowance. These are IRA limits, not the separate employee-deferral limits for a 401(k).

A traditional IRA contribution can be allowed but nondeductible. For a single contributor covered by a workplace plan, the 2026 deduction phaseout is modified AGI of $81,000–$91,000. For married filing jointly with the contributor covered, it is $129,000–$149,000. If only the contributor's spouse is covered, it is $242,000–$252,000. If neither spouse is covered at work, these workplace-plan deduction phaseouts do not apply.

Direct Roth contributions have their own income test

For 2026, direct Roth IRA contributions phase out at modified AGI of $153,000–$168,000 for single and head-of-household filers and $242,000–$252,000 for joint filers. Married-filing-separately rules can be much more restrictive and depend on whether you lived with your spouse. Check Publication 590-A rather than applying the single range to a separate return.

Contribution eligibility and conversion eligibility are different questions. If a proposed workaround uses nondeductible contributions and conversions, existing pretax IRA balances and Form 8606 basis matter. The same-budget example below assumes a fully deductible traditional contribution and eligibility for the Roth alternative; it is not a backdoor-Roth calculation.

A $4,560 budget can fund different account balances

Assume every dollar of a deductible $6,000 contribution saves 24% federal income tax. The $1,440 tax saving makes the net cost $4,560. The comparable Roth contribution is therefore $4,560, not $6,000. Both are below the general 2026 cap. Assume each account subsequently doubles, with identical investments and no fees.

The traditional account becomes $12,000. At a 24% effective tax rate on this eventual withdrawal, it leaves $9,120; the Roth becomes $9,120 and is fully spendable if its distribution is qualified. At an 18% withdrawal tax rate the traditional leaves $9,840; at 30% it leaves $8,400. Equal rates produce a tie because the tax factor and growth factor commute.

What changes near the contribution cap

If you contribute the same maximum amount to either account, Roth uses more current spending power. A fair comparison then includes investing the traditional deduction's tax saving elsewhere. That outside account may face taxes on earnings, so the simple tax-neutral equality no longer captures everything.

Also distinguish the marginal rate saved today from the effective incremental rate on future withdrawals. Pension income, Social Security, deductions, conversion years and state residence can change the latter. A nondeductible traditional IRA is a third case, with tracked basis and generally taxable earnings, not the deductible account modeled here.

Fit the tax choice into the retirement timeline

Roth IRA regular contributions come first under distribution ordering, while earnings have additional qualification rules. Traditional IRA distributions generally include taxable income; early distributions may also face the 10% additional tax. Do not substitute Roth 401(k) withdrawal rules for Roth IRA rules.

Use the retirement calculator for the broader savings question and the Roth conversion calculator for moving existing pretax money, not for deciding contribution eligibility. A sample household can help you see how different income years fit together. Educational examples cannot determine your personal tax treatment.

Equal current cost, equal future tax rate

Net savings budget
$4,560
Tax rate now and later
24%
Growth factor
2×

$9,120 spendable from either option

Traditional: $6,000 × 2 × 76%. Roth: $4,560 × 2. Assumes full deductibility and a qualified Roth distribution.

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Methodology

See how Meridary checks calculator figures, tests the planning engine, states model limits, and records corrections on the validation methodology page.

Sources

This is an educational estimate, not tax or financial advice. Figures reflect the law year shown and the inputs you provide. Consult a qualified professional before acting.