Roth IRA calculator

Project what a Roth IRA grows to tax-free — then settle the question the other calculators skip: Roth or Traditional. The answer turns on one number, and it isn't the return.

How the math works

The growth side is the future value of an ordinary annuity: a fixed contribution at the end of each year, compounding at your assumed return.

Where C is the annual contribution, r is the annual return, and n is the number of years. A starting balance, if you have one, compounds on its own as PV × (1 + r)n and gets added on top. Because Roth contributions are made with money you've already paid tax on, and qualified withdrawals are tax-free, this balance is also the after-tax number. Nothing comes off the top later.

The Roth-versus-Traditional side is where most calculators go wrong. A $7,000 Roth contribution and a $7,000 Traditional contribution are not the same size: the Roth dollars are already taxed, the Traditional dollars are deductible. To compare them you have to hold the take-home cost equal. The Traditional saver who spends the same out-of-pocket amount contributes C / (1 − tnow) before tax, and pays tax at withdrawal:

Read the second line closely. The return r and the years n cancel out of the comparison entirely. What's left is the ratio of two tax rates. Roth wins when tret is higher than tnow, Traditional wins when it's lower, and when the two rates are equal the accounts are identical to the dollar. That's the whole decision.

Worked example

Take a 30-year-old in the 22% marginal bracket putting $7,000 a year into an IRA for 30 years, at the S&P 500 long-run real return of 7.0%. They expect a 15% effective rate in retirement — lower, because retirement income is usually lower than peak-earning income.

The Roth grows to about $661,226, all of it spendable. Total contributions: $210,000. Growth: $451,226.

Now the comparison. A typical calculator drops the same $7,000 into a Traditional IRA, taxes it at 15% on the way out, and reports $562,042 — so the Roth "wins" by about $99,184. That number is wrong, because the two savers didn't spend the same amount. Contributing $7,000 to the Roth cost a full $7,000 of take-home pay. Contributing to the Traditional to match that take-home cost means putting in $8,974.36 before tax each year. Run that honestly and the Traditional lands at $720,566 after retirement tax — ahead of the Roth by about $59,341.

Same inputs, opposite conclusion. The Traditional wins here for one reason: this saver's tax rate falls from 22% to 15%, so deferring the tax to the lower rate is worth more than paying it now.

When this calculator is wrong

The comparison assumes you know your tax rate in retirement. You don't. It's a forecast about tax brackets, your own income, and your withdrawal mix decades out. Treat the result as a lean, not a certainty, and notice which way the lean points:

• Early in your career, the Roth's case is strongest. A worker in the 12% bracket today who expects to earn — and withdraw — more later is paying tax at a low rate now to skip a higher one later. That is exactly when tret > tnow.
• At your peak earning years, the Traditional's case is strongest. Deducting a contribution at a 24% or 32% marginal rate and withdrawing it at a lower effective rate in retirement is the same trade run the other way.
• The contribution limit tilts the field back toward Roth. The honest comparison above wanted the Traditional saver to put in $8,974.36 — but the 2024 IRA limit is $7,000 (plus a $1,000 catch-up at 50 and older). If you're already maxing out, you can't contribute the take-home-equivalent to a Traditional, so the Roth quietly lets you shelter more real money. That narrows or reverses the gap for high savers.
• Income can lock you out. Roth contributions phase out over a MAGI band: $146,000 to $161,000 for a single filer in 2024, and $230,000 to $240,000 for married filing jointly. Above the top of the band, direct Roth contributions are barred. A Traditional IRA has no income cap on contributing.

And the growth number is a projection, not a promise. A 7.0% real return is the long-run average, not what any particular 30-year stretch delivers. The order of good and bad years matters too, especially near the end.

What to do with the result

Start by pinning down the only input that decides the Roth-versus-Traditional question: your marginal rate today. If you don't know it, the federal tax bracket calculator gives you the marginal and effective rate from your taxable income. Then be honest about the retirement side. If you have a workplace pension or expect a large Traditional 401(k) balance already throwing off taxable withdrawals, your retirement rate may be higher than you'd guess, which strengthens the Roth.

When the two rates are genuinely a toss-up, the tie-breakers are real but secondary: the Roth has no required minimum distributions during your lifetime, its contributions can be pulled out at any time without tax or penalty, and tax-free income doesn't count toward the thresholds that tax your Social Security. If you can't call the rate question, those features are a reasonable reason to lean Roth. If you can call it, let the rates decide.

Common questions

How much can I contribute to a Roth IRA?

For 2024, the IRA contribution limit is $7,000, plus a $1,000 catch-up if you're 50 or older — that's a combined cap across all your IRAs, Roth and Traditional, not per account. It phases out at higher incomes (see the MAGI ranges above), and you can't contribute more than your earned income for the year.

Is a Roth or Traditional IRA better?

It depends on your marginal tax rate now versus your expected rate in retirement, and almost nothing else. Higher rate later favors the Roth; lower rate later favors the Traditional; equal rates make them identical. Return and time horizon, despite what you'd expect, drop out of the comparison entirely.

What is the Roth IRA 5-year rule?

Earnings come out tax- and penalty-free only if the Roth has been open at least five tax years and you're 59½ or older (death, disability, and a first-home purchase up to $10,000 also qualify). Both the five-year and the age test have to be met for earnings. Your own contributions are a separate matter.

Can I withdraw money from a Roth IRA early?

Your contributions — the money you put in — can be withdrawn at any age, tax-free and penalty-free, because you already paid tax on them. It's the earnings that are locked behind the 59½-and-five-year test. That flexibility on contributions is one of the Roth's underrated features.

What if I earn too much to contribute to a Roth?

Above the MAGI phase-out band, direct Roth contributions are off the table. A Traditional IRA still accepts contributions at any income, though the deduction phases out if you're covered by a workplace plan. There's also a conversion route many high earners use; the mechanics are their own topic and worth reading the IRS rules on before trying.