📈 IRA Calculator
Compare Traditional vs Roth IRAs and project your retirement savings growth
Tax-deductible contributions, taxable withdrawals
- Upfront tax deduction
- Pay taxes on withdrawal
- Required Minimum Distributions (RMDs)
- Ideal if tax rate is higher now than in retirement
After-tax contributions, tax-free withdrawals
- No upfront tax deduction
- Tax-free qualified withdrawals
- No RMDs during your lifetime
- Ideal if tax rate is lower now than in retirement
📊 How IRA Calculations Work
This calculator projects the growth of your IRA investments using compound interest formulas and compares the tax implications of Traditional vs Roth IRAs.
The formula used to calculate your future IRA value is:
Where:
- FV = Future value of the investment
- P = Principal investment amount (initial investment)
- C = Annual contribution amount
- r = Annual interest rate (in decimal form)
- t = Time in years
For Traditional IRA, the calculator accounts for:
- Tax deduction on contributions at your current tax rate
- Taxation of withdrawals at your expected retirement tax rate
For Roth IRA, the calculator accounts for:
- After-tax contributions (no upfront deduction)
- Tax-free qualified withdrawals in retirement
The comparison shows which IRA type may be more beneficial based on your specific tax situation and expectations about future tax rates.
Traditional IRAs offer tax-deductible contributions with taxable withdrawals in retirement, while Roth IRAs feature after-tax contributions with tax-free qualified withdrawals. The choice depends on whether you expect to be in a higher or lower tax bracket during retirement compared to your working years. Traditional IRAs have Required Minimum Distributions (RMDs) starting at age 73, while Roth IRAs have no RMDs during the account owner's lifetime.
For 2023-2024, the IRA contribution limit is $6,500 per year ($7,500 if you're age 50 or older). These limits apply to the total contributions to all of your Traditional and Roth IRAs. Contribution limits are periodically adjusted for inflation by the IRS. There are also income limits for deducting Traditional IRA contributions and contributing to Roth IRAs, which phase out at higher income levels.
Yes, you can contribute to both Traditional and Roth IRAs in the same year, but your total contributions to all IRAs cannot exceed the annual limit. For example, if the limit is $6,500, you could contribute $3,250 to a Traditional IRA and $3,250 to a Roth IRA, but not $6,500 to each. This strategy can be beneficial for tax diversification, allowing you to manage your tax liability in retirement more effectively.
For Roth IRAs in 2024, the contribution phase-out range is $146,000-$161,000 for single filers and $230,000-$240,000 for married couples filing jointly. For Traditional IRAs, if you're covered by a workplace retirement plan, the deduction phase-out range is $77,000-$87,000 for singles and $123,000-$143,000 for married couples. These limits are adjusted annually for inflation.
You can generally withdraw from Traditional IRAs without the 10% early withdrawal penalty after age 59½. Roth IRA contributions can be withdrawn at any time without tax or penalty, but earnings withdrawals before age 59½ may be subject to taxes and penalties unless an exception applies. Exceptions to the early withdrawal penalty include first-time home purchase (up to $10,000), higher education expenses, certain medical expenses, and substantially equal periodic payments.