Roth IRA Calculator

Calculate your Roth IRA growth potential and compare it with taxable accounts. Plan your retirement with confidence using our comprehensive calculator.

🧮 Roth IRA Calculator

What is a Roth IRA Calculator?

A Roth IRA calculator is a powerful financial planning tool that helps you estimate the future value of your Roth Individual Retirement Account. It takes into account your current balance, annual contributions, expected rate of return, and time horizon to project how much your retirement savings could grow over time.

Unlike traditional IRAs, Roth IRAs offer tax-free growth and tax-free qualified withdrawals in retirement. This calculator helps you understand the significant advantage of tax-free compounding by comparing your Roth IRA growth against a regular taxable investment account.

Whether you're just starting your retirement planning journey or optimizing your existing strategy, this calculator provides valuable insights into how your Roth IRA contributions can build substantial wealth over time.

How to Use the Roth IRA Calculator

Enter your current Roth IRA balance (or $0 if you're just starting)
Input your planned annual contribution amount, or select 'Maximize Contributions' to automatically use the IRS limit based on your age
Set your expected annual rate of return (historically, the stock market has averaged around 6-10% annually)
Enter your current age and planned retirement age
Input your marginal tax rate to see the comparison with taxable accounts
Click 'Calculate' to see your projected Roth IRA balance, total contributions, interest earned, and a visual comparison with taxable accounts

Latest Roth IRA Insights & Guidelines

2025-2026 Contribution Limits

For 2025, the contribution limit is $7,000 for those under 50 and $8,000 for those 50 and older (with the $1,000 catch-up contribution). For 2026, these limits increase to $7,500 and $8,600 respectively. These limits apply to the total of all your IRA contributions (Roth and traditional combined).

Income Phase-Out Ranges

For 2025, single filers and heads of household can make full contributions if their Modified Adjusted Gross Income (MAGI) is below $150,000. Contributions are reduced between $150,000-$165,000 and eliminated above $165,000. For married couples filing jointly, full contributions are allowed below $236,000, reduced between $236,000-$246,000, and eliminated above $246,000.

Tax-Free Growth Advantage

The primary benefit of a Roth IRA is tax-free growth and tax-free qualified withdrawals. Unlike traditional IRAs where you pay taxes on withdrawals, or taxable accounts where you pay taxes on interest and capital gains annually, Roth IRAs allow your investments to compound completely tax-free. This can result in significantly more wealth at retirement, especially over long time horizons.

Best Practices for Maximizing Your Roth IRA

To maximize your Roth IRA benefits: contribute early in the year to maximize compounding time, max out contributions if possible (especially with catch-up contributions after age 50), assume realistic returns (6% is a conservative estimate), and consider your current vs. future tax rates when choosing between Roth and traditional IRAs. Remember, you have until April 15 of the following year to make contributions for the previous tax year.

Understanding Roth IRA Details

What is MAGI and Why Does It Matter?

Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (AGI) plus certain deductions added back, such as student loan interest, IRA contributions, and foreign income exclusions. Your MAGI determines your eligibility to contribute to a Roth IRA. If your MAGI exceeds the phase-out range for your filing status, you may need to consider a backdoor Roth IRA strategy or traditional IRA contributions instead.

Roth IRA vs. Traditional IRA vs. Taxable Account

Roth IRAs offer tax-free growth and withdrawals but use after-tax contributions. Traditional IRAs provide upfront tax deductions but tax withdrawals as ordinary income. Taxable accounts offer flexibility but subject you to annual taxes on dividends, interest, and capital gains. The calculator shows how the tax-free compounding of a Roth IRA can significantly outperform taxable accounts over time, even though you don't get an upfront deduction.

The Power of Compound Interest

Compound interest is the process where your investment earnings generate their own earnings. In a Roth IRA, this compounding happens tax-free, which means 100% of your returns stay invested and continue growing. Over decades, this can create a substantial difference compared to taxable accounts where taxes reduce your compounding power each year.

Key Considerations for Roth IRA Planning

Contributions are made with after-tax dollars (no upfront tax deduction)
Income phase-outs may limit or eliminate your ability to contribute directly
You can withdraw your contributions (but not earnings) at any time without penalty
Qualified withdrawals (after age 59½ and account open 5+ years) are completely tax-free

Common Roth IRA Strategies

Max out contributions early in the year to maximize compounding time
Consider a backdoor Roth IRA if your income exceeds the direct contribution limits
Use Roth IRAs for investments with high growth potential to maximize tax-free gains

Frequently Asked Questions

What is the difference between a Roth IRA and a traditional IRA?

The main difference is when you pay taxes. With a Roth IRA, you contribute after-tax dollars and enjoy tax-free growth and withdrawals in retirement. With a traditional IRA, you may get a tax deduction on contributions, but you'll pay taxes on withdrawals. Roth IRAs are generally better if you expect to be in a higher tax bracket in retirement.

Can I contribute to both a Roth IRA and a traditional IRA?

Yes, you can contribute to both, but the total combined contributions cannot exceed the annual limit ($7,000 for 2025, or $8,000 if you're 50 or older). You'll need to split your contributions between the two accounts while staying within this total limit.

What happens if my income is too high to contribute to a Roth IRA?

If your income exceeds the phase-out limits, you can consider a 'backdoor Roth IRA' strategy. This involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA. Consult with a tax professional to ensure this strategy is appropriate for your situation.

When can I withdraw money from my Roth IRA without penalty?

You can withdraw your contributions (not earnings) at any time without taxes or penalties. To withdraw earnings tax-free and penalty-free, you must be at least 59½ years old and have held the account for at least 5 years. There are some exceptions for first-time home purchases, qualified education expenses, and other specific situations.

How should I choose my expected rate of return?

A conservative estimate is 6%, which accounts for a diversified portfolio with some bonds. Historically, the S&P 500 has averaged around 10% annually, but individual results vary. Consider your risk tolerance, investment timeline, and asset allocation. It's better to use a conservative estimate and be pleasantly surprised than to overestimate and fall short of your retirement goals.

What is the deadline for making Roth IRA contributions?

You can make Roth IRA contributions for a given tax year until the tax filing deadline of the following year, typically April 15. For example, you have until April 15, 2026, to make contributions for the 2025 tax year. This gives you extra time to maximize your contributions if you receive a year-end bonus or tax refund.