Roth IRA Calculator
Estimate how much your Roth IRA contributions could grow over time and how much you could withdraw tax-free in retirement.
Roth IRA Projection
| Current Roth IRA Balance | $20,000.00 |
|---|---|
| Total Contributions | $245,000.00 |
| Total Interest Earned | $1,054,487.30 |
| Balance at Retirement | $1,319,487.30 |
| Tax Savings vs. Traditional IRA | $329,871.83 |
About Roth IRA Calculator
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. Unlike a traditional IRA, contributions to a Roth IRA are made with after-tax dollars, meaning you've already paid taxes on the money you put into it. In return for no up-front tax break, your money grows tax-free, and you can withdraw it tax-free in retirement.
How Roth IRA Calculator Works
The calculator projects the growth of your Roth IRA based on your current balance, annual contributions, expected rate of return, and time until retirement. It also calculates the tax savings compared to a traditional IRA.
Key Benefits of Roth IRA
- Tax-free withdrawals: Qualified distributions from a Roth IRA are completely tax-free.
- No required minimum distributions (RMDs): Unlike traditional IRAs, you're not required to withdraw money at any age.
- Flexibility: You can withdraw your contributions (but not earnings) at any time without penalty.
- Estate planning benefits: Roth IRAs can be passed on to heirs tax-free.
Roth IRA Contribution Limits
For 2023, the contribution limit is $6,500 ($7,500 if you're age 50 or older). These limits are subject to income restrictions and may change annually.
Roth IRA vs. Traditional IRA
The main difference between Roth and traditional IRAs is when you pay taxes:
- Traditional IRA: Contributions may be tax-deductible, but you pay taxes when you withdraw the money in retirement.
- Roth IRA: Contributions are made with after-tax dollars, but withdrawals in retirement are tax-free.
The Roth IRA calculator shows you the potential tax savings of choosing a Roth over a traditional IRA based on your current tax rate and projected retirement balance.