Roth IRA Calculator

A Roth IRA is a retirement savings account that offers tax-free growth and tax-free withdrawals in retirement. Unlike traditional IRAs, you contribute after-tax dollars, but all earnings and withdrawals in retirement are completely tax-free.

The Roth IRA is one of the most powerful retirement savings vehicles available, especially for younger investors who have decades for their investments to grow tax-free. The longer your money grows, the more valuable the tax-free benefit becomes.

Contribution Limits:

• Under age 50: $7,000 per year
• Age 50 and older: $8,000 per year (includes $1,000 catch-up contribution)

Income Limits (2024):

• Single filers: Phase-out range $146,000 - $161,000
• Married filing jointly: Phase-out range $230,000 - $240,000
• Above these limits, you cannot contribute directly to a Roth IRA

• Tax-Free Growth: All investment earnings grow completely tax-free
• Tax-Free Withdrawals: Qualified withdrawals in retirement are 100% tax-free
• No RMDs: Unlike traditional IRAs, Roth IRAs have no required minimum distributions
• Flexible Contributions: You can withdraw your contributions anytime without penalty
• Estate Planning: Roth IRAs can be passed to heirs tax-free
• Hedge Against Future Taxes: Lock in today's tax rate and avoid future tax increases

Roth IRA:

• Contributions are made with after-tax dollars (no immediate tax deduction)
• Withdrawals in retirement are tax-free
• No required minimum distributions (RMDs)
• Best for those who expect to be in a higher tax bracket in retirement

Traditional IRA:

• Contributions may be tax-deductible (immediate tax benefit)
• Withdrawals in retirement are taxed as ordinary income
• Required minimum distributions (RMDs) starting at age 73
• Best for those who expect to be in a lower tax bracket in retirement

Qualified Distributions (Tax-Free and Penalty-Free):

• Account must be at least 5 years old
• You must be at least 59½ years old, OR
• Due to disability, death, or first-time home purchase (up to $10,000)

Contribution Withdrawals:

• You can withdraw your contributions anytime without taxes or penalties
• Only earnings are subject to the 5-year rule and age requirements

• Start Early: The earlier you start, the more time for tax-free compound growth
• Max Out Contributions: Try to contribute the maximum amount each year
• Invest Aggressively: Since growth is tax-free, consider higher-growth investments
• Automate Contributions: Set up automatic monthly contributions to stay consistent
• Rebalance Regularly: Review and adjust your portfolio allocation annually
• Consider Backdoor Roth: If income is too high, explore backdoor Roth IRA conversion

• Not contributing early enough - missing years of tax-free compound growth
• Contributing too little - not maximizing the annual contribution limit
• Withdrawing earnings early - triggering taxes and penalties
• Not understanding income limits - contributing when ineligible
• Keeping investments too conservative - not taking advantage of tax-free growth
• Missing the contribution deadline - contributions must be made by tax filing deadline

A Roth IRA is ideal for:

• Young professionals early in their careers (lower current tax bracket)
• Anyone who expects to be in a higher tax bracket in retirement
• Those who want tax-free income in retirement
• People who want flexibility with no required minimum distributions
• Individuals looking to leave tax-free assets to heirs
• Anyone who wants to hedge against future tax increases