How it works
Contributions go in at the start of each year and grow at the return. Traditional money is taxed at your retirement rate when you withdraw it; Roth money comes out tax-free. With the same contribution, the tax a traditional contribution saves you today is invested in a taxable account, and its growth is taxed at the end. With the same take-home cost, the Roth contribution is smaller because it is paid from after-tax money; at equal tax rates both come out exactly the same. The break-even rate is the retirement tax rate at which both leave the same amount.