Roth IRA Calculator
Enter your current age, planned retirement age, annual contribution amount, and expected return rate. The calculator shows your projected balance and how much of it is tax-free growth.
Balance at retirement:
Total contributions:
Tax-free growth:
How the Roth IRA Calculator Works
This calculator projects the future value of your Roth IRA at retirement using the future value of an annuity formula. It assumes you make consistent annual contributions at the start of each year and earn a fixed compounding return. The result shows your projected balance broken down into total contributions and tax-free investment growth.
The Growth Formula
Balance = C × [(1 + r)ⁿ − 1] / r
Where:
- C = Annual contribution amount
- r = Annual expected return rate (as a decimal)
- n = Number of years until retirement
This is the future value of an ordinary annuity — contributions made at the end of each period. The actual balance may vary based on contribution timing, market performance, and fees.
Worked Example
A 30-year-old contributes $7,000/year to a Roth IRA, plans to retire at 65, and expects an average annual return of 7%:
- Years to retirement: 65 − 30 = 35 years
- Balance: $7,000 × [(1.07³⁵ − 1) / 0.07] = $7,000 × 138.24 = $967,700
- Total contributions: $7,000 × 35 = $245,000
- Tax-free growth: $967,700 − $245,000 = $722,700
You contribute $245,000 over your working life and receive nearly $968,000 in tax-free retirement income — with over $722,000 being investment gains you'll never pay taxes on.
2024 Roth IRA Contribution Limits
The IRS sets annual contribution limits for IRAs. For 2024:
| Age | Annual Contribution Limit |
|---|---|
| Under 50 | $7,000 |
| 50 and older (catch-up) | $8,000 |
These limits apply across all your IRA accounts combined (Roth + Traditional). You cannot contribute more than your earned income for the year.
Roth IRA Income Limits (2024)
Unlike Traditional IRAs, the ability to contribute directly to a Roth IRA is restricted for higher earners:
| Filing Status | Full Contribution (MAGI) | Phase-Out Range | No Contribution Allowed |
|---|---|---|---|
| Single / Head of Household | Under $146,000 | $146,000 – $161,000 | Over $161,000 |
| Married Filing Jointly | Under $230,000 | $230,000 – $240,000 | Over $240,000 |
| Married Filing Separately | $0 | $0 – $10,000 | Over $10,000 |
MAGI = Modified Adjusted Gross Income. If your income exceeds these limits, you may still be able to contribute through a backdoor Roth IRA conversion.
Roth IRA vs. Traditional IRA
Choosing between a Roth and Traditional IRA is one of the most impactful decisions in retirement planning:
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Contributions | After-tax dollars | Pre-tax (may be deductible) |
| Tax on growth | None | Taxed on withdrawal |
| Required Minimum Distributions | None during owner's lifetime | Required starting at age 73 |
| Withdrawal flexibility | Contributions can be withdrawn anytime | 10% penalty before age 59½ |
| Best for | Expect higher taxes in retirement | Expect lower taxes in retirement |
General rule of thumb: Choose a Roth IRA if you're early in your career or expect to be in a higher tax bracket in retirement. Choose a Traditional IRA if you want an immediate tax deduction and expect lower income in retirement.
The Backdoor Roth IRA
High earners who exceed Roth IRA income limits can use a two-step "backdoor" strategy:
- Make a non-deductible contribution to a Traditional IRA (no income limits)
- Convert the Traditional IRA to a Roth IRA shortly after
This is perfectly legal and widely used. However, if you have existing pre-tax money in Traditional IRAs, the "pro-rata rule" may result in partial taxation of the conversion. Consult a tax advisor before executing this strategy.
Tax-Free Withdrawal Rules
To withdraw Roth IRA earnings completely tax-free and penalty-free, you must meet two conditions:
- Age 59½ or older at the time of withdrawal
- Five-year rule — the account must have been open for at least 5 years
Your contributions (not earnings) can always be withdrawn at any time, tax-free and penalty-free — one of the Roth IRA's most attractive features for building an emergency fund backup.
Related Tools
- 401(k) Calculator
- Retirement Calculator
- Compound Interest Calculator
- Investment Return Calculator
- CD Calculator
Sources
- IRS Publication 590-A – Contributions to Individual Retirement Arrangements
- IRS – Amount of Roth IRA Contributions You Can Make for 2024
Frequently Asked Questions
Is a Roth IRA better than a 401(k)?
They serve different purposes and many financial advisors recommend using both. A 401(k) offers higher contribution limits ($23,000 in 2024 vs $7,000 for an IRA) and often comes with employer matching. A Roth IRA offers more investment flexibility, no required minimum distributions, and completely tax-free withdrawals in retirement. The most powerful strategy is to contribute enough to your 401(k) to get the full employer match, then max out a Roth IRA, and then contribute more to the 401(k) if you have additional savings capacity.
Can I contribute to a Roth IRA if I also have a 401(k)?
Yes, as long as you meet the Roth IRA income limits, you can contribute to both a Roth IRA and a 401(k) in the same year. Having both allows you to diversify your tax exposure in retirement — withdrawals from the 401(k) are taxable while Roth IRA withdrawals are tax-free.
What happens to my Roth IRA when I die?
Roth IRAs can be passed to beneficiaries. Surviving spouses can roll the account into their own IRA with no changes. Non-spouse beneficiaries generally must withdraw all funds within 10 years under the SECURE 2.0 Act, but those withdrawals remain income tax-free since the original contributions were made with after-tax dollars. This makes a Roth IRA a powerful estate planning tool.
How does the 7% return assumption in the example compare to historical stock market returns?
The U.S. stock market (S&P 500) has historically returned approximately 10% per year before inflation and around 7% per year after adjusting for inflation over long time horizons. Using 7% as a nominal return is actually a conservative estimate for a stock-heavy portfolio. Many target-date funds and diversified index funds used in IRAs have averaged in this range over 20–30 year periods, though past performance does not guarantee future results.