Roth (after-tax) Account or Pre-Tax Account?
Starting in 2006, you may have the option to contribute to Roth account. Use this calculator to help determine which retirement plan option might be best for you.
How the roth (after-tax) account or pre-tax account? calculator works
It compares contributing the same amount to an after-tax (Roth) account versus a pre-tax account: the Roth grows tax-free, while the pre-tax balance is taxed at your expected retirement rate.
Worked example: with annual account contribution of $10,000, years until retirement of 30 and annual return of 7.00%, the roth (after-tax) account or pre-tax account? shows better after-tax outcome of Pre-tax account.
- Roth account (tax-free)
- $1,010,730
- Pre-tax balance
- $1,329,908
- Pre-tax after tax
- $1,037,329
- Difference
- $26,598
| Tax rate in retirement | Roth | Pre-tax |
|---|---|---|
| 14.00% | $1,010,730 | $1,143,721 |
| 22.00% | $1,010,730 | $1,037,329 |
| 26.00% | $1,010,730 | $984,132 |
| 34.00% | $1,010,730 | $877,740 |
The better choice flips around 26.00% — Roth wins on one side, Pre-tax on the other.
The formula
Both grow as (balance + contribution) × (1 + return). Roth after-tax = balance. Pre-tax after-tax = balance × (1 − retirement tax rate).
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the roth (after-tax) account or pre-tax account?
After-tax (Roth) or pre-tax — which is better?
Roth wins when your retirement tax rate is at or above today’s; pre-tax wins when it will be lower and you invest the upfront tax savings. The calculator compares both after tax.
What does “after-tax” mean here?
It means Roth-style contributions made with money you have already paid income tax on, so qualified withdrawals — including all growth — come out tax-free.
Should I diversify across both?
Many advisors suggest holding some of each, so you can manage your taxable income in retirement by choosing which account to draw from.
Is the Roth (after-tax) Account or Pre-Tax Account? free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.