The math behind this calculator (click to expand)
Both paths run the same compounding loop year by year: balance_next = balance * (1 + r) + annual_contribution. The contribution is capped by the 2026 IRS limit ($7,500 under age 50, $8,600 with the catch-up) and reduced within the MAGI phaseout window. Single phaseout: $153,000-$168,000 MAGI; MFJ: $242,000-$252,000.
The Traditional path stores the same gross balance but applies balance * (1 - assumed_retirement_tax_rate) at withdrawal. The Roth path is shown without a tax haircut on the assumption that distributions are qualified. This is an equal-nominal-contribution view, not an equal-after-tax-cost comparison: it does not model whether a Traditional contribution is deductible or invest any deduction savings. Backdoor conversions and pro-rata complications are also outside the projection.
Implementation by Michael.
MAGI Phaseouts: The Numbers That Actually Matter
The Roth IRA's income limits create a hard ceiling that catches people mid-career. A single filer earning $148,000 in 2025 who gets a raise to $160,500 in 2026 goes from full contribution eligibility to roughly half. The 2026 phaseout for single filers runs from $153,000 to $168,000 MAGI (IRS Notice 2025-67). For married couples filing jointly, it's $242,000 to $252,000.
At a MAGI of $160,500 (single), the 2026 worksheet reduces an under-50 saver's $7,500 limit to about $3,750 before accounting for contributions to other IRAs. At $168,000 and above, the direct-contribution limit is zero. The IRS calculation rounds a reduced limit up to the nearest $10 and uses a $200 minimum when a positive result would otherwise be lower. MAGI is not simply salary; use the IRS worksheet rather than adding a few income line items informally.
The Backdoor Roth: A Workaround With Fine Print
A nondeductible Traditional IRA contribution followed by a Roth conversion may be available when income prevents a direct Roth contribution; conversions do not have the direct-contribution income limit. The conversion can still create taxable income, and Form 8606 reporting and the pro-rata rule matter.
The trap is the pro-rata rule. If you hold $200,000 in pre-tax IRA balances and make a $7,500 nondeductible contribution, only about 3.6% of a same-size conversion is after-tax basis; roughly 96.4% is taxable. A workplace-plan rollover may change that calculation if the plan accepts incoming rollovers, but eligibility, fees, and investment options should be reviewed first.
Tax Bracket Arbitrage: Roth vs Traditional
The conventional wisdom - "contribute Traditional if you're in a high bracket now, Roth if you're in a low bracket" - only works when the Traditional contribution is deductible. In 2026, a single filer covered by a workplace retirement plan loses the deduction between $81,000 and $91,000 of MAGI. An uncovered filer may still qualify, depending on a spouse's workplace coverage. If a full deduction is available, a $7,500 contribution at a 24% marginal rate saves $1,800 of federal tax; without the deduction, it does not.
Pre-tax balances may later generate required minimum distributions, generally beginning at age 73 for people born from 1951 through 1959 and age 75 for people born in 1960 or later. Those distributions can raise taxable income, but the result depends on account size, other income, deductions, and future tax law. Roth savings can provide tax diversification; no single ordering rule is best for everyone.
The 5-Year Rule and Conversion Ladders
A Roth conversion ladder can help some early retirees access converted pre-tax money before age 59.5. Each conversion has a separate five-tax-year period for the 10% additional-tax recapture rule. A taxable amount converted in 2026 generally clears that conversion's five-year period in 2031; Roth distribution ordering rules, exceptions, and the separate rule for qualified earnings still apply.
Conversion timing is scenario-specific. A ladder requires other accessible funds during the initial five-tax-year periods and can affect ACA premium credits, Social Security taxation, Medicare IRMAA, state tax, and the taxation of investment income. Comparing the rate previously saved with the marginal rate on a conversion can be useful, but it is not a guaranteed return and does not capture those interactions.
What might change in the next 24 months
Three pieces of the Roth landscape are worth tracking. First, the IRS contribution limit is inflation-indexed and rose from $7,000 in 2024-2025 to $7,500 in 2026 ($8,600 with the age-50 catch-up). The 2026 direct-contribution phaseouts are $153,000-$168,000 single and $242,000-$252,000 MFJ. Future limits should not be assumed before the IRS publishes them.
Second, current law allows nondeductible IRA contributions and Roth conversions, but proposals have periodically sought to change those rules. Do not assume a future change, effective date, or transition rule before legislation is enacted.
Third, SECURE 2.0's "Roth catch-up requirement" for certain higher-paid workers applies to workplace-plan catch-up contributions, not the IRA catch-up. The 2026 IRA catch-up is $1,100 above the $7,500 base limit and can apply to Traditional or Roth IRA contributions, subject to the account's other eligibility rules.