Roth IRA Calculator

It's an individual retirement account funded with after-tax money. You open it at a brokerage, contribute up to the yearly limit and invest in funds, stocks or bonds. It doesn't give you a tax break now. Instead, your money grows tax free, and you can withdraw it tax free in retirement if you meet the rules. It has no required withdrawals during your lifetime.

Up to $7,500, or $8,600 if you're 50 or older. You can't contribute more than your earned income for the year, and your total across all traditional and Roth IRAs must stay within the limit. High earners face a phase-out. You generally have until the tax filing deadline, usually in April, to make contributions for the previous year.

The allowed contribution phases out from $153,000 to $168,000 of modified adjusted gross income for single filers, from $242,000 to $252,000 for married couples filing jointly, and from $0 to $10,000 for married filing separately if you lived together. Inside the range, your limit shrinks in proportion and rounds up to the next $10. At $160,000 single, you can put in $4,000. Above the range, you can't contribute directly. Some higher earners use a backdoor Roth instead, so check the rules with a tax professional.

The account itself doesn't earn anything. It's a container, and your money grows through what you invest in. If you hold index funds, returns come from rising prices and reinvested dividends. If your contributions sit in cash, as they do by default at some brokerages, they earn very little, so make sure you've actually invested them. Many people overlook this step.

It depends on your contributions, your return and how long you invest. At a steady 7%, $7,500 a year grows to about $103,623 after 10 years, $307,466 after 20 and $708,456 after 30. Actual returns vary, and some years lose money. Enter your own numbers above to see your result.

Many people plan around 6% to 7% a year for a stock-heavy portfolio over decades, though no return is guaranteed and individual years vary widely. Your return depends entirely on what you hold. A common approach is a low-cost index or target-date fund. Test a lower rate in the calculator as well, so your plan doesn't depend on the best case.

There's no official benchmark for a Roth alone. It's better to look at all your retirement savings together. Fidelity suggests 1x your salary by 30, 3x by 40, 6x by 50 and 8x by 60 across all accounts. A Roth is just one part of that. If you've got a 401(k) too, count both, and consider which tax treatment you'd want more of.

A traditional IRA may give you a tax deduction now, but withdrawals are taxed later, and required distributions generally start at age 73. A Roth gives no deduction now, but qualified withdrawals are tax free, and there are no required distributions for you. Roughly, a Roth tends to suit people who expect a higher tax rate in retirement than they pay today.

Many people use both. A 401(k) has higher limits and may include an employer match, which is hard to beat. A Roth IRA adds tax-free income later, more investment choices and easier access to your contributions. A common order is to contribute enough for the match, then fund the Roth, then go back to the 401(k). See our 401(k) calculator.

Contributions come out first, and they're free of tax and penalty at any time. After that come conversions and then earnings. Earnings are tax free once you're 59½ and your Roth is at least five years old. Exceptions to the penalty exist for a first home (up to $10,000), disability and certain other cases, though tax on earnings can still apply. Keep records of your contributions.

You move money from a traditional IRA or similar pre-tax account into a Roth, and pay income tax on the amount converted in that year. After that, it grows tax free. People often do this in low-income years. Each conversion has its own five-year clock for avoiding a penalty on early withdrawals. A large conversion can push you into a higher tax bracket, so plan it carefully.

You get no tax deduction today, which is a real cost if your tax rate falls in retirement. Contribution limits are low compared with a 401(k), and high incomes phase out direct contributions. There's no employer match, and you have to set up your own contributions. Investing is also up to you, so a Roth left in cash won't grow much.