Roth IRA Calculator

Our Roth IRA calculator helps you project the growth of your Roth IRA and compare it to a Traditional IRA to determine which may be more advantageous for your situation. Here's how to use it effectively:

1. Enter your personal information - Your current age and expected retirement age determine your investment horizon.
2. Input your account details - Include your current Roth IRA balance and how much you plan to contribute annually.
3. Set investment assumptions - The expected rate of return on your investments and the anticipated inflation rate affect your projected growth.
4. Specify tax rates - Enter your current tax rate and your expected tax rate in retirement. This is crucial for comparing Roth and Traditional IRAs.

After entering these values, the calculator will show your projected Roth IRA balance at retirement, compare it to the after-tax value of a Traditional IRA with the same contributions, and indicate which account type provides the greater tax advantage based on your inputs.

Tax-Free Growth and Withdrawals

The primary advantage of a Roth IRA is that qualified withdrawals are completely tax-free, including all investment earnings. This means that every dollar you see in your account is yours to keep in retirement, with no tax obligations. This tax-free growth can be especially valuable if:

• You expect to be in a higher tax bracket in retirement
• Tax rates increase in the future
• You have a long investment horizon that allows for significant compound growth

No Required Minimum Distributions (RMDs)

Unlike Traditional IRAs, Roth IRAs have no required minimum distributions during the owner's lifetime. This means you can leave your money in the account to continue growing tax-free for as long as you want, making it an excellent vehicle for wealth transfer to heirs.

Access to Contributions

You can withdraw your Roth IRA contributions (but not earnings) at any time without taxes or penalties. This provides greater flexibility compared to Traditional IRAs, which generally impose a 10% early withdrawal penalty plus taxes on any withdrawals made before age 59½.

Income Limits (2025)

Not everyone is eligible to contribute directly to a Roth IRA. Eligibility is based on your modified adjusted gross income (MAGI):

Contribution Limits (2025)

For 2025, the maximum annual contribution to a Roth IRA is:

• $6,500 for individuals under age 50
• $7,500 for individuals age 50 or older (includes $1,000 "catch-up" contribution)

It's important to note that this limit applies to the total of all your IRA contributions (both Roth and Traditional) for the year.

Backdoor Roth IRA

If your income exceeds the limits for direct Roth IRA contributions, you might still be able to fund a Roth IRA through a process known as a "backdoor Roth." This involves:

1. Contributing to a Traditional IRA (which has no income limits for contributions, though deductibility may be limited)
2. Converting the Traditional IRA to a Roth IRA (paying taxes on any pre-tax amount converted)

This strategy is most effective if you have no existing pre-tax IRA balances due to the pro-rata rule for conversions.

The choice between a Roth IRA and a Traditional IRA depends primarily on your current and expected future tax situation:

Many financial advisors recommend having a mix of both Roth and Traditional retirement accounts to provide tax diversification in retirement, giving you flexibility in managing your tax situation from year to year.