Roth IRA Calculator

How to use this calculator

Enter your current age, retirement age, current Roth IRA balance, annual contribution, and expected return. The catch-up option automatically switches to $8,000/year from age 50 if enabled.

The calculator shows your total Roth IRA value at retirement, tax-free monthly income (using the 4% rule), total contributions you’ll make, and how much of the final balance is pure tax-free growth.

Annual Contribution should be your actual planned contribution, not the maximum allowed. The 2025 limit is $7,000 ($8,000 if 50 or older). If you’re income-phased out of direct contributions, see the backdoor Roth section below.

Expected Return is nominal annual return. 7% is standard for a diversified equity portfolio. Use 8-10% if you’re holding mostly US equities and have a 20+ year horizon.

How Roth IRA growth works

A Roth IRA grows exactly like any investment account. The only difference is that neither the growth nor the withdrawals are taxed, as long as the account is 5 years old and you’re 59½ or older.

Every dollar you put in is after-tax money. On a $70,000 salary in the 22% bracket, contributing $7,000 to a Roth IRA costs you $7,000 out of pocket (vs. $5,460 out of pocket for a Traditional IRA contribution that saves $1,540 in taxes now).

The Roth advantage compounds. At 7% for 35 years, that $7,000 grows to roughly $75,000 — completely tax-free. If it were in a Traditional IRA, you’d owe roughly $16,500 in taxes on withdrawal at 22%, keeping only $58,500.

The 2025 contribution limits and income phase-outs

The IRS caps Roth IRA contributions at $7,000 per year ($8,000 if you’re 50 or older). These limits apply per person, not per account — you can have multiple Roth IRAs but the total across all of them can’t exceed the limit.

Income phase-outs cut off direct contributions at higher incomes:

“MAGI” is Modified Adjusted Gross Income. It includes wages, self-employment income, rental income, and most other sources. Pre-tax 401k contributions reduce your MAGI. So contributing more to a 401k can actually restore Roth IRA eligibility if you’re near the phase-out threshold.

If you earn $158,000 as a single filer, you can contribute a reduced amount. The formula: (upper limit − your MAGI) / $15,000 × $7,000.

Roth IRA vs Traditional IRA: when each wins

The choice between Roth and Traditional comes down to one question: will you be in a higher or lower tax bracket in retirement?

Most people in their 20s and 30s should default to Roth. Your income is likely near its lifetime low. Contributing after-tax dollars now — when the tax rate is 12-22% — protects future growth from higher rates.

At 55 earning $200,000, the calculation changes. A 32% current bracket vs a projected 22% retirement bracket favors Traditional.

Roth IRA withdrawal rules

The 5-year rule and the age 59½ rule work together:

Contributions can always be withdrawn any time, at any age, without taxes or penalties. You already paid tax on them.

Earnings require both conditions: account at least 5 years old AND age 59½ or older. Pull earnings early and you owe taxes plus a 10% penalty.

Exceptions to the early withdrawal penalty (but taxes still apply): first home purchase up to $10,000, disability, death, unreimbursed medical expenses over 7.5% of AGI, substantially equal periodic payments (SEPP/72t).

The 5-year clock starts January 1 of the year you made your first contribution. Contribute in December 2025 and the 5-year rule is satisfied on January 1, 2030 — not December 2030.

Roth IRAs also have no required minimum distributions during the owner’s lifetime. You can leave the money untouched until you need it, or pass it to heirs.

The backdoor Roth IRA

If your income exceeds the phase-out threshold, you can still contribute via the backdoor Roth:

1. Contribute to a non-deductible Traditional IRA (no income limits apply)
2. Convert the Traditional IRA to a Roth IRA

The conversion is taxable on the pre-tax portion of the converted amount. If you contribute $7,000 after-tax and convert immediately with no gains, you owe zero taxes. It’s a clean workaround.

The pro-rata rule complicates this. If you have existing pre-tax Traditional IRA money, the IRS treats all your IRAs as one pool. Converting $7,000 becomes taxable in proportion to your pre-tax balance.

Say you have $63,000 in a pre-tax Traditional IRA and contribute $7,000 after-tax (total: $70,000). Only 10% ($7,000/$70,000) of any conversion is after-tax. Converting $7,000 means 90% is taxable, not 0%.

The clean solution: roll your pre-tax Traditional IRA into your employer’s 401k if the plan accepts rollovers. Then the backdoor Roth works without the pro-rata issue.

What to invest inside a Roth IRA

Since Roth IRA growth is never taxed, you want your highest-expected-return assets inside it.

Growth assets (small-cap equities, international stocks, growth ETFs) generate returns through price appreciation. Holding them in a Roth means all that appreciation is tax-free. Holding them in a taxable account means capital gains taxes on sale.

Dividend-heavy assets and bonds are less ideal inside a Roth — they generate current income that would also be tax-free in a taxable account at qualified dividend rates, so the Roth advantage is smaller.

A simple allocation for someone in their 30s: 100% equity inside the Roth IRA. U.S. total market index fund or a three-fund portfolio (US stocks, international stocks, bonds) weighted heavily toward equities.

Bonds belong in pre-tax accounts where their interest income would otherwise be taxed at ordinary rates. Equities belong in the Roth where capital gains are tax-free.

Catch-up contributions and the final decade

At age 50, you can contribute an extra $1,000/year to a Roth IRA ($8,000 total vs $7,000). That extra $1,000/year for 15 years at 7% adds roughly $25,000 to your balance. Modest, but real.

The bigger opportunity in the final decade before retirement: if you’re still earning and in a lower bracket (say, 22% now vs. potentially 24% in retirement), front-load Roth contributions aggressively.

Someone who consistently maxes their Roth IRA from age 25 to 65 contributes $280,000 in today’s dollars. At 7% return, that grows to roughly $1.5M tax-free — a $1.22M tax-free gain. If that $1.22M were in a taxable account, taxes at 15-20% capital gains rates would cost $183,000-$244,000.

The Roth IRA advantage is largest when: you have the most time, you’re in a lower bracket now, and you expect higher taxes in retirement. Start early and max it every year.

Common Roth IRA mistakes

Waiting to invest after contributing. Contributing to a Roth IRA but leaving the money in the default cash/money market position is one of the most common mistakes. You must actively select investments. The account itself doesn’t invest automatically.

Overcontributing. Exceeding the annual limit ($7,000) triggers a 6% excise tax on the excess amount for every year it stays in the account. Fix it by withdrawing the excess before the tax filing deadline.

Missing the filing deadline. You can contribute to a Roth IRA for the prior tax year until the tax filing deadline (April 15 for most). Contributing $7,000 by April 14, 2026 counts as a 2025 contribution.

Early earnings withdrawal. Taking out investment gains before 59½ triggers a 10% penalty plus ordinary income taxes. Contributions are fine to withdraw early. Earnings aren’t. The IRS considers contributions withdrawn first, earnings last — so small withdrawals from a large Roth usually come from contributions.

Thinking a Roth IRA is only for retirement. It’s also a flexible emergency fund for contributions. A Roth IRA with $40,000 in contributions you can access penalty-free functions as a retirement account and a flexible savings buffer. Many financial planners recommend maxing it before a taxable brokerage account for this reason.