IRA Calculator

Compare Traditional, Roth, and Taxable Savings Accounts

🏦 IRA Calculator

Compare Traditional, Roth, and Taxable Savings Accounts

What is an IRA Calculator?

An IRA (Individual Retirement Account) calculator is a financial planning tool that helps you estimate contributions, eligibility, growth, tax implications, and retirement outcomes for different types of IRAs, including Traditional, Roth, SEP, and SIMPLE IRAs.

This calculator allows you to compare the after-tax value of Traditional IRAs, Roth IRAs, and regular taxable savings accounts at retirement. By inputting your current balance, annual contributions, expected rate of return, age, and tax rates, you can make informed decisions about which retirement savings strategy is best for your situation.

The calculator takes into account the tax advantages of IRAs, including tax-deferred growth for Traditional IRAs, tax-free growth for Roth IRAs, and the impact of capital gains taxes on taxable accounts. It also considers your current and expected retirement tax rates to provide accurate after-tax comparisons.

How to Use the IRA Calculator

Enter Account Information: Input your current IRA balance, annual before-tax contribution amount, and expected rate of return. The 2025 contribution limits are $7,000 for those under 50, $8,000 for ages 50-59, and $11,250 for ages 60-63 (SECURE 2.0 Act).
Set Age and Timeline: Enter your current age and planned retirement age. The calculator will project your savings growth over this time period.
Configure Tax Rates: Input your current marginal tax rate (combined federal and state/local) and your expected tax rate in retirement. This is crucial for accurate after-tax comparisons.
Calculate Results: Click the Calculate button to see a detailed comparison of Traditional IRA, Roth IRA, and taxable savings outcomes, including both pre-tax and after-tax balances at retirement.
Review the Chart: Analyze the balance accumulation chart to visualize how each account type grows over time and understand the impact of taxes on your retirement savings.

Latest IRA Insights (2025)

SECURE 2.0 Act Updates: The SECURE 2.0 Act has increased catch-up contributions for ages 60-63 to $11,250 (up from the standard $7,500), providing enhanced savings opportunities for those approaching retirement.
Contribution Limits: For 2025, the standard IRA contribution limit is $7,000 for those under 50, with an additional $1,000 catch-up contribution for ages 50-59, and the new enhanced $11,250 limit for ages 60-63.
Tax Strategy Considerations: Choose Traditional IRA if you expect lower tax rates in retirement; choose Roth IRA if you expect higher tax rates in retirement or want tax-free withdrawals. Consider your current income, AGI/MAGI limits, and employer plan participation.
Required Minimum Distributions (RMDs): Traditional IRAs require RMDs starting at age 73 (as of 2023), while Roth IRAs have no RMDs during the owner's lifetime, making them excellent for estate planning and legacy goals.
Early Withdrawal Penalties: Withdrawals before age 59½ typically incur a 10% penalty plus income taxes (Traditional IRA) or penalties on earnings (Roth IRA). Plan accordingly and consider emergency fund strategies outside of retirement accounts.

Understanding IRA Types

Traditional IRA

Contributions may be tax-deductible (subject to income limits and employer plan participation). Earnings grow tax-deferred, and withdrawals in retirement are taxed as ordinary income. Best for those who expect to be in a lower tax bracket in retirement or want immediate tax deductions.

Roth IRA

Contributions are made with after-tax dollars (no immediate tax deduction). Earnings grow tax-free, and qualified withdrawals in retirement are completely tax-free. Best for those who expect to be in a higher tax bracket in retirement or want tax-free income and no RMDs.

Taxable Savings Account

No contribution limits or withdrawal restrictions, but investment earnings are subject to annual capital gains taxes (typically 15% for long-term gains). Provides maximum flexibility but less tax efficiency than IRAs. Useful for goals before retirement or as a supplement to tax-advantaged accounts.

Key Considerations

Income Limits: Roth IRA contributions have income limits (MAGI-based). Traditional IRA deductibility depends on income and employer plan participation. High earners may need to consider backdoor Roth conversions or other strategies.
Investment Returns: The calculator uses your input rate of return assumption. Historical stock market returns average around 7-10% annually, but actual returns vary. Use conservative estimates (e.g., 6-7%) for realistic planning.
Inflation: Consider 2-3% annual inflation when planning. The purchasing power of your retirement savings will be affected by inflation, so factor this into your contribution and withdrawal strategies.
Professional Advice: This calculator provides hypothetical projections based on your inputs. Consult with a qualified financial advisor or tax professional for personalized advice considering your complete financial situation, health costs, Social Security, pensions, and other assets.

Frequently Asked Questions

Should I choose a Traditional or Roth IRA?

The choice depends on your current vs. expected retirement tax rate. If you expect to be in a lower tax bracket in retirement, a Traditional IRA may be better (get the deduction now). If you expect higher taxes in retirement or want tax-free withdrawals, choose a Roth IRA. Many people benefit from having both types for tax diversification.

Can I contribute to both Traditional and Roth IRAs?

Yes, but the combined total contribution to all IRAs cannot exceed the annual limit ($7,000 for under 50, $8,000 for 50-59, $11,250 for 60-63 in 2025). You can split contributions between Traditional and Roth IRAs as long as the total doesn't exceed these limits.

What if I need to withdraw money before retirement?

Traditional IRA withdrawals before age 59½ typically incur a 10% penalty plus income taxes. Roth IRA contributions (not earnings) can be withdrawn anytime tax and penalty-free. Some exceptions exist for first-time home purchases, education expenses, and medical costs. Maintain an emergency fund outside retirement accounts to avoid early withdrawals.

How accurate is this calculator?

The calculator provides estimates based on your inputs and assumptions (constant rate of return, tax rates, etc.). Actual results will vary due to market fluctuations, tax law changes, and personal circumstances. Use it as a planning tool, not a guarantee, and consult financial professionals for personalized advice.

What are the 2025 IRA contribution limits?

For 2025, the standard IRA contribution limit is $7,000 for those under 50. Ages 50-59 can contribute an additional $1,000 catch-up ($8,000 total). Ages 60-63 can contribute up to $11,250 (enhanced catch-up under SECURE 2.0). These limits apply to the combined total of Traditional and Roth IRA contributions.