IRA Calculator: Traditional vs. Roth vs. SEP Comparison

Choosing the right Individual Retirement Account (IRA) is one of the most impactful decisions for your long-term financial health. The primary difference between the various types of IRAs is when you pay taxes. Our Universal IRA Calculator is designed to provide a fair, head-to-head comparison by converting all outcomes into "Net Wealth" at retirement.

The Three Main Paths:

1. Traditional IRA (Tax-Deferred)

With a Traditional IRA, your contributions are often tax-deductible today, meaning you invest "pre-tax" dollars. Your money grows without being taxed every year, but you will pay ordinary income tax on every dollar you withdraw during retirement. This strategy is generally best if you expect your tax rate to be lower in retirement than it is now.

2. Roth IRA (Tax-Free)

A Roth IRA requires you to contribute "post-tax" dollars. While you don't get a tax break today, the massive advantage is that your growth and future withdrawals are 100% tax-free. This is typically the superior choice if you expect to be in a higher tax bracket later in life or if you have a long time horizon for growth.

3. Taxable Brokerage Account

In a standard investment account, you invest post-tax dollars, and your annual earnings (dividends and realized gains) are taxed every year. This creates a "tax drag" that slows down the compounding process significantly compared to any IRA plan.

How to Compare Fairly

To compare a $7,000 Traditional IRA contribution vs. a $7,000 Roth IRA contribution wouldn't be fair, because the Traditional contribution "costs" you less out-of-pocket today due to the tax deduction. Our calculator adjusts for this by assuming you have a fixed amount of gross income to invest and calculates exactly how much would end up in your pocket after all taxes are paid.

Navigate the complexities of retirement planning. Use our Universal IRA Calculator to find your most tax-efficient path to wealth.