Roth IRA Calculator

A Roth IRA is a type of Individual Retirement Arrangement that offers tax-free growth and tax-free income in retirement. Unlike a traditional IRA, contributions to a Roth IRA are made with after-tax dollars and are not tax-deductible. In exchange, qualified withdrawals — including all investment earnings — are completely free of federal income tax. The account gets its name from Senator William Roth and was established under the Taxpayer Relief Act of 1997.

Because contributions are made with money that has already been taxed, account holders can withdraw their own contributions at any time, for any reason, without tax or penalty. Earnings, however, are subject to specific rules around age and account age before they can be withdrawn tax-free. Roth IRAs can be opened at banks, brokerages, and online investment platforms, all of which are regulated by the IRS under the same core rules.

This calculator projects the future value of a Roth IRA and compares it against an equivalent regular taxable brokerage account, assuming both grow at the same expected rate of return.

For the Roth IRA, the full future value grows untaxed and is shown as-is. For the taxable account, the same formula applies, but each year's investment gains are reduced by the marginal tax rate before compounding, since interest, dividends, and realized gains in a regular account are generally taxable. The difference between the two final balances is the estimated tax-free advantage of using a Roth IRA. Contribution amounts are capped at the IRS annual limit, and selecting "Maximize Contributions" automatically applies the higher catch-up limit once the account holder reaches age 50.

The IRS sets annual contribution limits and income thresholds for Roth IRAs, which are periodically adjusted for inflation.

• Contribution limit: $7,500 per year for individuals under age 50, and $8,600 per year for those age 50 and older (the extra $1,100 is a "catch-up" contribution).
• Income limits: Single filers and heads of household with a modified adjusted gross income above $168,000 cannot contribute directly. For married couples filing jointly, the limit is $252,000.
• Earned income requirement: You must have earned income — wages, salary, tips, bonuses, or self-employment income — at least equal to your contribution amount.
• Contribution deadline: Contributions for a given tax year can be made up until the tax filing deadline of the following April.

High earners who exceed the income limits may still be able to contribute indirectly through a "backdoor Roth IRA," which involves contributing to a traditional IRA and then converting it to a Roth IRA.

Direct contributions to a Roth IRA can always be withdrawn tax-free and penalty-free, since they were made with after-tax dollars. Earnings are treated differently. For a withdrawal of earnings to be tax-free and penalty-free, two conditions generally must be met: the account must be at least five years old, and the account holder must be 59½ or older, disabled, or using the funds for one of a few qualifying exceptions.

Qualifying exceptions to the early-withdrawal penalty on earnings include a first-time home purchase (up to a $10,000 lifetime limit), qualified higher-education expenses, unreimbursed medical expenses or health insurance premiums during unemployment, and distributions made to a beneficiary after the account holder's death. One major advantage of the Roth IRA structure is that it has no required minimum distributions (RMDs) during the original account holder's lifetime — unlike traditional IRAs and most 401(k) plans, which require withdrawals starting at age 73.

The headline difference between a Roth IRA and a regular taxable brokerage account is how investment growth is taxed. In a taxable account, dividends, interest, and realized capital gains are taxed each year (or whenever they occur) at the investor's marginal tax rate, which slows down compounding over time. In a Roth IRA, the entire balance — contributions and all accumulated earnings — grows completely free of federal tax, and qualified withdrawals are not taxed at all.

Over long time horizons, this tax-free compounding effect can be substantial. The longer the money stays invested and the higher the marginal tax rate would otherwise be, the larger the gap between the two account types tends to grow. This calculator's "Roth IRA Advantage" figure illustrates that gap based on your specific inputs.