Roth IRA Calculator

This Roth IRA calculator projects what your account is worth at retirement and, more usefully, how much more it keeps than the identical contributions in an ordinary taxable account. Enter a balance, an annual contribution, a return, and your marginal tax rate, and it runs both side by side. The difference is the tax you never pay on decades of growth, and on typical figures it is the largest single number on the page.

What a Roth IRA is

A Roth IRA is an individual retirement arrangement funded with money you have already paid income tax on. Nothing inside it is taxed again: the growth is tax-free and so are qualified withdrawals in retirement. It was created by the Taxpayer Relief Act of 1997 and carries the name of Senator William Roth, who sponsored it.

The difference from a traditional IRA comes down to when the tax lands. A traditional IRA may give you a deduction now and taxes everything on the way out. A Roth gives no deduction now and takes nothing on the way out. The second difference matters just as much: your own contributions can be withdrawn at any time, tax-free and penalty-free, which no other retirement account allows.

You can open one at almost any brokerage, bank, or robo-adviser. All of them operate under the same IRS rules, so the account itself is identical wherever it sits; what differs is the investment menu, the fees, and the service. Our IRA Calculator runs the traditional side for comparison.

Contribution rules

• After-tax dollars, no deduction. Contributions do not reduce this year's taxable income. Low and middle earners can still claim the Saver's Credit on Form 8880, worth 10% to 50% of the first $2,000 contributed, though it is non-refundable.
• The 2026 limit is $7,500, rising to $8,600 from age 50. Both figures cover all your IRAs combined, traditional and Roth together, not each account separately.
• You need earned income. Wages, tips, bonuses, or self-employment income in the year you contribute. Investment income does not count, and you cannot contribute more than you earned.
• Income limits apply. For 2026, eligibility phases out above an adjusted gross income of $168,000 for single and head-of-household filers, and $252,000 for married couples filing jointly, up from $165,000 and $246,000 in 2025.
• The deadline is the tax filing date. Contributions for a tax year can be made until April of the following year, so there is a window to top up after the calendar turns.

Getting money out

The withdrawal rules are where the Roth earns its reputation for flexibility, and they treat contributions and earnings very differently.

Contributions come out whenever you like, tax-free and penalty-free, at any age. You already paid tax on that money.

Earnings are tax-free and penalty-free once you are 59½ and the account is at least five years old. Both conditions, not either.

If the account is younger than five years, earnings withdrawals face tax and usually a penalty. The 10% penalty is waived, though the tax is not, when any of these apply:

• You are 59½ or older
• You become disabled
• The money buys a first home, up to a $10,000 lifetime cap
• It pays qualified education expenses
• It is paid to a beneficiary after your death
• It covers unreimbursed medical expenses, or health insurance while unemployed

There are no required minimum distributions. Traditional IRAs and 401(k)s force withdrawals from 73; the Roth IRA is the only tax-sheltered retirement account that never does. You can leave it untouched for life.

Where the Roth wins

Access without penalty. Most retirement accounts lock money away for decades. Roth contributions do not, which makes the account usable as a backstop rather than purely a retirement vehicle.

Liquidity, with one catch. Because contributions are reachable, some savers treat the account as a deep emergency reserve. The catch: withdraw after you have already hit the annual limit and you cannot put that money back the same tax year. It becomes an ordinary investment rather than Roth money.

Tax-free income in retirement. Withdrawals do not appear as taxable income, which is worth more than it first sounds, since it also keeps them out of the calculations that determine how much of your Social Security is taxed and what you pay for Medicare.

Invisible to FAFSA. Retirement accounts are not reported as assets on the Free Application for Federal Student Aid, so a Roth does not reduce a child's aid eligibility the way a taxable brokerage account can. Contributions can also be withdrawn later for qualified education costs.

Good for heirs. Inherited Roth distributions are not taxed. A surviving spouse can treat the account as their own; most other beneficiaries must empty it within ten years but still pay no income tax on what comes out. Prepaying the tax also shrinks your taxable estate.

Tax diversification. In retirement, 401(k) and traditional IRA withdrawals are taxable and so is part of Social Security. Having a pot that generates no taxable income lets you cover a large expense in a given year without pushing yourself into a higher bracket.

Where it falls short

You pay the tax now. Contributions come from after-tax income, so the same gross salary funds a smaller contribution than it would to a traditional account.

The limit is small. $7,500 a year against $24,500 for a 401(k) in 2026. For a high earner trying to build a retirement balance quickly, a Roth IRA alone will not do it.

Income limits shut some savers out. Above $168,000 single or $252,000 married filing jointly you cannot contribute directly, though the conversion route below remains open.

No deduction today. If you are in a high bracket now and expect a lower one later, the traditional deduction may simply be worth more.

The five-year clock. Earnings are not tax-free until the account has been open five years, which mainly affects people opening a Roth close to retirement. For qualified distributions the clock starts on the first day of the tax year of your first contribution; each conversion carries its own separate five-year period.

Poor fit for charitable bequests. If you plan to leave retirement assets to charity, a tax-deferred account is the better vehicle, since the charity pays no tax on it anyway and the Roth's prepaid tax is wasted.

Converting a traditional IRA

Any amount can be moved from a traditional IRA to a Roth, and there are no income limits on doing so. This is the workaround for high earners, commonly called a backdoor Roth. It also sidesteps the annual contribution cap, since a conversion is not a contribution, and it removes future required minimum distributions from that money.

The trade is that you pay income tax on the converted amount in the year you convert. That makes conversions most attractive when you expect higher tax rates later, in a year your income dips, or when you want to leave heirs a tax-free asset.

Three routes exist. Same trustee is simplest: the institution holding the traditional IRA moves it internally. Different trustees means the receiving firm requests the funds, which is usually the right call if you want a better fund menu or lower fees; holdings can often move as securities rather than being sold. A 60-day rollover puts the money in your hands first and must be redeposited within 60 days, or the whole distribution becomes taxable plus a 10% penalty and the conversion fails. The IRS can waive the deadline for events genuinely outside your control.

Before converting, check a few things. Pay the tax from outside the IRA, because using IRA money to cover it permanently removes that amount from tax-free growth. Make sure the converted money has years to grow, since the upfront tax needs time to be worth paying and the five-year clock applies. Selling appreciated assets to raise the tax can trigger capital gains of its own. Required minimum distributions cannot be converted. And the once-per-year rollover limit applies to 60-day rollovers, not to direct trustee-to-trustee transfers, which are unlimited.

Spousal and custodial Roth IRAs

Two variations solve problems the standard rules would otherwise create.

A spousal Roth IRA lets a working spouse fund an account for a partner with little or no earned income, provided the couple files jointly and combined earnings cover both contributions. It is an ordinary Roth in the non-earning spouse's own name, so they own it outright regardless of what happens to the marriage. For a household where one person steps back from paid work, this is the difference between one retirement account and two, and over twenty years the second account is rarely a small number.

A custodial Roth IRA can be opened for a minor with earned income, whether from a summer job, tutoring, or babysitting, as long as the income is genuine and documented. The contribution is capped at what the child earned or the annual limit, whichever is lower, and an adult controls the account until the child reaches the age of majority in their state. The appeal is time: money contributed at 16 has half a century to compound tax-free, and a teenager's tax bracket makes the give-up on the deduction close to zero. The contributions also stay reachable for a first home or education later.

What to hold inside it

A Roth IRA is a container, not an investment. Opening one and leaving the balance in cash is a common and expensive mistake, because the account's whole advantage is sheltering growth that never happens.

Because the shelter is most valuable on the assets that generate the most tax, a Roth is the natural home for holdings that throw off income or turn over frequently. Investments that already receive favourable treatment, such as buy-and-hold index funds with low dividends or municipal bonds that are tax-exempt anyway, gain less from being sheltered. Placing assets deliberately across taxable and sheltered accounts is called asset location, and it is one of the few free improvements available to an ordinary investor.

Two things are not allowed: life insurance and collectibles, including art, gems, and most precious metals, though certain bullion coins qualify. Beyond that the menu depends on your provider, which is worth checking before you open the account rather than after.

Roth or traditional

The honest answer is that it turns on a tax rate you cannot know: yours in retirement against yours today. A Roth wins if your future rate is higher, a traditional wins if it is lower, and if the rates are identical the two produce the same result.

In practice a few things tilt it. Younger savers in low brackets usually favour a Roth, since rates have decades to rise and their current deduction is worth little. High earners in peak years often prefer the deduction. Anyone who values not being forced to withdraw at 73, or wants to leave a tax-free inheritance, gets something from a Roth that no traditional account offers. Splitting contributions between both is a legitimate hedge against guessing wrong.

How this calculator works

It grows two accounts on identical contributions. The Roth compounds at your full expected return with nothing removed. The taxable account compounds at the return reduced by your marginal rate, since gains are taxed as they are earned, and the running total of that tax is reported separately. The gap between the two lines at retirement is what the tax shelter is worth on your numbers.

Two simplifications are worth knowing. The taxable comparison assumes gains are taxed annually at your marginal rate, which is close to reality for interest and dividends but harsher than the long-term capital gains treatment a buy-and-hold investor might get. And the calculator does not check the income limits, so if you are above them, the direct contribution it models would need to be a conversion instead. For the wider retirement picture see the Retirement Calculator, and the 401(k) Calculator for the employer-plan side.