IRA Calculator

How an IRA Grows Over Time

A Traditional IRA (Individual Retirement Account) is a tax-advantaged account you open independently, outside of any employer plan. Every dollar you contribute has the chance to grow through compound investment returns for as long as it stays in the account, and every year's growth then compounds again on top of the year before — which is why an IRA's growth curve looks flat in the early years and accelerates the longer the money is left invested.

IRA vs. 401(k): The Key Differences

Both are retirement accounts with tax advantages, but they differ in a few important ways. A 401(k) is sponsored by an employer and often comes with a matching contribution — essentially free money added on top of yours. An IRA has no employer involved at all: you open it yourself at a brokerage, choose your own investments from a much wider selection than most 401(k) plans offer, and contribute up to a lower annual limit than a 401(k) allows. Many savers use both — a 401(k) up to the employer match, then an IRA for additional tax-advantaged savings.

The Compound Growth Formula

Your final balance combines what your starting balance grows into on its own, plus what each year's contribution grows into as it compounds for whatever time remains.

$$A = P(1+r)^n + C \cdot \frac{(1+r)^n - 1}{r}$$

This calculator computes the same result month by month rather than plugging directly into the formula, so the year-by-year table and chart above show an exact running balance at every step.

Fund Fees Shrink the Growth Rate Before Any Tax Applies

Funds held in a Traditional IRA carry an annual expense ratio that is taken out of the fund's returns automatically. Enter it in the optional Expense Ratio field and the projection subtracts it from your expected return first, so the "Projected Balance" and "Effective Annual Rate" describe growth after fees. Because this is a pre-tax account, the balance you see is not what you will spend: withdrawals are taxed as ordinary income, so the figure is best read as a before-tax pile rather than take-home money.

Worked Example: 5,000 Dollars Start + 6,500 Dollars/Year at 7% for 30 Years

With the default inputs, the projection ends near 701,400 dollars. Roughly 200,000 dollars of that is money you put in and roughly 501,400 dollars is growth. In a Traditional IRA, every dollar of that 701,400 is still owed ordinary income tax when it comes out. If your withdrawals were taxed at an effective 22 percent, for instance, you would keep about 547,000 dollars — a reminder that the balance and your spendable retirement income are different numbers.

Deductibility and Income Phase-Outs

Anyone with earned income can generally contribute to a Traditional IRA, but whether the contribution is tax-deductible depends on your income and whether you or a spouse is covered by a workplace retirement plan. If you are covered, the deduction shrinks over an income range and can disappear entirely above it; if you are not covered, the deduction is generally available regardless of income. A nondeductible contribution is still allowed, but then part of your balance has already been taxed, which needs to be tracked with the IRS. The exact income ranges change over time, so this page leaves them out — check the IRS for the current-year figures.

Required Minimum Distributions

Unlike a Roth IRA, a Traditional IRA cannot sit untouched forever. Once the owner reaches the IRS's required starting age, a minimum amount must be withdrawn each year, calculated from the year-end balance and a life-expectancy factor, and that amount is taxed as ordinary income. Missing a required distribution can trigger an IRS penalty on the shortfall. The starting age has been changed by recent legislation, so confirm the current age in IRS Publication 590-B before planning around it.

How a Withdrawal Is Taxed

Money taken out of a Traditional IRA in retirement is added to your other income for the year, so a large one-time withdrawal can push you into a higher bracket than a series of smaller ones would. Spreading withdrawals across several years, and coordinating them with Social Security and other income, is often how retirees manage the tax bill on this account.

2026 IRA Contribution Limits

The IRS sets an annual limit on how much you can contribute to an IRA, currently around 7,500 dollars for those under 50 and around 8,600 dollars for those 50 and older, with the extra amount known as a catch-up contribution. These limits can change from year to year with inflation adjustments — this calculator compares your entered "Annual Contribution" against these reference figures and shows a warning if it's exceeded, but always check the current IRS limit before assuming a larger contribution is allowed.

Traditional vs. Roth: Which Is Right for Me?

A Traditional IRA, the type this calculator models, uses pre-tax (often deductible) contributions and taxes withdrawals as ordinary income in retirement. A Roth IRA flips that: contributions are made with after-tax dollars, but qualified withdrawals in retirement, including all the growth, come out completely tax-free. Broadly, a Traditional IRA tends to favor someone who expects to be in a lower tax bracket in retirement than they are today, while a Roth tends to favor someone who expects to be in the same or a higher bracket later — though income limits, other accounts, and personal circumstances all matter too. The Roth IRA Calculator runs the same style of projection using after-tax contributions, so you can compare both side by side with your own numbers.

Is an IRA Alone Enough for Retirement?

For most savers, an IRA is one piece of a larger retirement-income picture rather than the whole plan. The Social Security Calculator estimates your likely Social Security benefit, and the 401(k) Retirement Calculator projects an employer-sponsored account if you have one — adding all three projected income sources together gives a rough sense of whether your total retirement income, not just this IRA balance alone, is likely to be enough.

Common IRA Mistakes

Contributing sporadically gives up years of compounding that cannot be recovered later, and an automatic monthly transfer avoids that. Leaving contributions in cash inside the account is a quiet cost, since uninvested money earns little while the years pass. Assuming every contribution is deductible is another, because coverage by a workplace plan can limit the deduction. And forgetting a required distribution once you reach the starting age can bring a penalty, while withdrawing early, before the IRS's allowed age, often adds a 10 percent additional tax on top of ordinary income tax.

IRA Terms You Should Know

Traditional IRA — an IRA funded with pre-tax (often deductible) contributions, where withdrawals in retirement are taxed as ordinary income.

Contribution Limit — the maximum amount the IRS allows you to contribute to an IRA in a given year, which can differ by your age.

Catch-Up Contribution — an additional amount savers age 50 and older are permitted to contribute beyond the standard annual limit.

Required Minimum Distribution (RMD) — the minimum amount a Traditional IRA owner must start withdrawing annually once they reach the IRS's required starting age.

Rollover — moving funds from one retirement account (such as an old 401(k)) into an IRA without triggering taxes or penalties.

Nondeductible Contribution — a Traditional IRA contribution you cannot deduct, which leaves after-tax money in the account that is not taxed again when withdrawn.

Sources & Further Reading

• IRS — Individual Retirement Arrangements (IRAs): the IRS overview of IRA types, contributions, and withdrawals.
• IRS — Publication 590-A, Contributions to IRAs: the detailed rules on contribution limits and the Traditional IRA deduction.
• IRS — Publication 590-B, Distributions from IRAs: the rules on withdrawals, taxation, and required minimum distributions.

This calculator provides estimates for educational and planning purposes only. Actual amounts may vary based on real investment performance, fees, and contribution timing. It is not tax or financial advice — consult a qualified professional and verify current-year contribution limits with the IRS.