Roth IRA Calculator
Calculate potential tax-free earnings on your Roth IRA retirement investments. Compare contribution scenarios and visualize how your retirement savings can grow over time.
Note: Enter your Roth IRA details below to estimate your retirement savings. The calculator uses standard compound growth formulas to project potential tax-free returns.
Understanding Roth IRAs
A Roth IRA is a retirement investment account that offers tax-free growth and tax-free withdrawals in retirement. Unlike Traditional IRAs, contributions to Roth IRAs are made with after-tax dollars, but qualified withdrawals are completely tax-free.
How Roth IRAs Work
When you invest in a Roth IRA, you contribute money that has already been taxed. Your contributions and earnings grow tax-free, and qualified withdrawals in retirement are not taxed. This can be particularly advantageous if you expect to be in a higher tax bracket during retirement or if tax rates increase in the future.
Key Concepts
Contribution Limits
For 2025, you can contribute up to $7,000 annually if you're under 50, or $8,000 if you're 50 or older (catch-up contribution).
Income Limits
Your ability to contribute to a Roth IRA may be limited or phased out based on your modified adjusted gross income (MAGI) and tax filing status.
Tax-Free Growth
All earnings and growth within a Roth IRA accumulate tax-free, and qualified distributions are not taxed.
Five-Year Rule
To make tax-free withdrawals of earnings, your Roth IRA must be open for at least five years, and you must be at least 59½ years old.
No Required Minimum Distributions (RMDs)
Unlike Traditional IRAs, Roth IRAs don't require you to take distributions at any age, allowing for continued tax-free growth throughout your lifetime.
Flexibility
You can withdraw your contributions (but not earnings) at any time without penalties or taxes.
Roth IRA Investment Strategies
Early and Consistent Contributions
The power of compound growth makes early contributions especially valuable. Even small, regular contributions made consistently over decades can grow substantially due to tax-free compounding.
Roth vs. Traditional IRA
Choosing between a Roth and Traditional IRA depends on your current tax situation and expectations for retirement. If you anticipate being in a higher tax bracket in retirement, a Roth IRA may be more advantageous.
Roth Conversion Ladder
Converting Traditional IRA funds to a Roth IRA over time can spread out the tax impact while setting up tax-free withdrawals in retirement. This strategy is particularly useful for early retirement planning.
Backdoor Roth IRA
If your income exceeds Roth IRA limits, you might consider a "backdoor" Roth IRA by first contributing to a Traditional IRA and then converting those funds to a Roth IRA. Consult with a tax professional about tax implications.
While Roth IRAs offer significant tax advantages, it's important to consider your overall retirement strategy. A mix of pre-tax (Traditional) and post-tax (Roth) retirement accounts can provide tax diversification and flexibility in retirement.
The power of a Roth IRA comes from the combination of tax-free growth and tax-free withdrawals. This calculator helps illustrate how your contributions can grow over time and the potential tax savings compared to taxable investments or Traditional IRAs.
Frequently Asked Questions
What is the difference between a Roth IRA and a Traditional IRA?
The main difference lies in when you pay taxes. With a Traditional IRA, you contribute pre-tax dollars and pay taxes when you withdraw the money in retirement. With a Roth IRA, you contribute after-tax dollars, but qualified withdrawals in retirement are completely tax-free. Additionally, Traditional IRAs have required minimum distributions (RMDs) starting at age 73, while Roth IRAs don't have RMDs during the owner's lifetime.
Can I withdraw money from my Roth IRA before retirement?
Yes, but with conditions. You can withdraw your contributions (but not earnings) at any time without penalties or taxes. To withdraw earnings tax-free, your account must be at least five years old and one of the following must be true: you're at least 59½ years old, you're using the money for a first-time home purchase (up to $10,000), you become disabled, or the withdrawal is made by your beneficiary after your death.
How much can I contribute to a Roth IRA?
For 2025, the contribution limit is $7,000 per year if you're under 50 years old, and $8,000 per year if you're 50 or older (this includes a $1,000 "catch-up" contribution). These limits apply to the total contributions across all your IRAs (both Traditional and Roth combined).
Can everyone contribute to a Roth IRA?
No, there are income limits. Your ability to contribute to a Roth IRA begins to phase out if your modified adjusted gross income (MAGI) exceeds certain thresholds, which vary based on your tax filing status. For 2025, the phase-out range for single filers is $146,000 to $161,000, and for married filing jointly, it's $230,000 to $240,000.
What happens if I contribute too much to my Roth IRA?
If you contribute more than the allowed amount, you may face a 6% excise tax on the excess contribution each year until you correct the error. You can fix this by withdrawing the excess contribution (and any earnings on it) before your tax filing deadline, or by applying the excess to a future year's contribution.
What investment options do I have in a Roth IRA?
Roth IRAs offer a wide range of investment options, including stocks, bonds, mutual funds, ETFs, CDs, and more. The specific options available depend on where you open your Roth IRA. Brokerage firms typically offer the widest selection of investment options.
How does inflation affect my Roth IRA?
Inflation reduces the purchasing power of money over time. While your Roth IRA investments may grow, inflation means each dollar will buy less in the future. This calculator allows you to account for inflation to see the "real" future value of your savings. Choose investments that have historically outpaced inflation for long-term growth.
Should I convert my Traditional IRA to a Roth IRA?
Converting may make sense if you expect to be in a higher tax bracket in retirement, have a long time horizon before retirement, can pay the conversion taxes from non-retirement funds, or want to avoid required minimum distributions. However, you'll need to pay income taxes on the converted amount in the year of conversion. Consult with a financial advisor to determine if conversion makes sense for your situation.