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Tax Strategy · 5 min
For illustration only — not financial advice. Verify assumptions before making decisions.
The winner comes down to one comparison: your tax rate now vs. your tax rate in retirement. Fill in both and we'll show which account wins for you.
Verdict
Traditional IRA wins
Your current rate (22%) is higher than your retirement rate (15%). The upfront deduction is more valuable.
At Retirement — 35 years from now
Roth IRA
$1.04M
100% tax-free
4% rule → $3K/mo
Traditional IRA
$828K
after 20% withdrawal tax (fed + state)
+ $280K if deduction reinvested = $1.11M
Gross balance before tax: $1.04M — identical for both accounts.
Balance Over Time (post-tax value)
Break-Even Analysis
| Your current federal rate | 22% |
| State tax rate | 5.0% |
| Current combined rate | 27% |
| Expected retirement federal rate | 15% |
| Retirement combined rate | 20% |
| Break-even federal retirement rate | 22% |
Federal rate falls 7pp — Traditional wins.
From the writing
Dear Younger Me: Just Open the Roth IRA
How a boring index fund in a forgotten Roth IRA turned into $40K — entirely tax-free.
The Core Rule
- Roth beats Traditional when your tax rate rises from now to retirement.
- Traditional beats Roth when your tax rate falls from now to retirement.
- State tax is symmetric — it cancels out and doesn't change the winner.
- Roth has no required minimum distributions and allows early access to contributions.
- 2025 limits: IRA $7,000/$8,000 (50+) · 401(k) $23,500/$31,000 (50+).