Roth IRA Calculator
Project the growth of your Roth IRA based on your current balance, annual contributions, and expected return.
Understanding Your Roth IRA
A Roth IRA lets you contribute after-tax dollars that then grow tax-free. Qualified withdrawals in retirement are completely tax-free, which is the primary advantage over a traditional IRA. This calculator projects how much your account could grow based on your contributions and expected investment returns.
The formula compounds your current balance forward and adds annual contributions each year: Balance = Current Balance x (1 + r)^n + Annual Contribution x [((1 + r)^n - 1) / r], where r is the annual return and n is years until retirement.
Frequently Asked Questions
What is a Roth IRA?
A Roth IRA is a retirement account where you contribute money you have already paid taxes on. Your investments grow tax-free, and you pay no taxes when you withdraw in retirement (after age 59.5 and the account has been open at least 5 years). It is one of the most tax-efficient ways to save for retirement.
What are the contribution limits?
For 2024, the annual contribution limit is $7,000 if you are under 50, or $8,000 if you are 50 or older. These limits are set by the IRS and may change each year. You cannot contribute more than your earned income for the year.
What are the tax benefits of a Roth IRA?
You do not get a tax deduction when you contribute, but all growth and qualified withdrawals are completely tax-free. This means decades of investment gains are never taxed. If you expect to be in a higher tax bracket in retirement, a Roth IRA can save you a significant amount of money.
When can I withdraw from a Roth IRA?
You can withdraw your contributions (not earnings) at any time without taxes or penalties. Earnings can be withdrawn tax-free after age 59.5 if the account has been open for at least 5 years. Early withdrawal of earnings may incur a 10% penalty plus income tax, with some exceptions.
What is the difference between a traditional and Roth IRA?
With a traditional IRA, you get a tax deduction when you contribute but pay taxes when you withdraw. With a Roth IRA, you pay taxes now but withdraw tax-free later. The Roth is generally better if you expect your tax rate to be higher in retirement or want more flexibility with withdrawals.
Are there income limits for a Roth IRA?
Yes. For 2024, single filers with modified adjusted gross income above $161,000 cannot contribute directly. The limit for married filing jointly is $240,000. If you earn above these thresholds, you may still be able to use a "backdoor Roth" strategy by contributing to a traditional IRA and converting it.