Roth IRA Calculator

What Makes a Roth IRA Different

A Roth IRA uses the opposite tax treatment from a Traditional IRA or 401(k). With those accounts, you contribute pre-tax money (often getting a deduction now) and pay ordinary income tax when you withdraw in retirement. A Roth IRA flips that: you contribute money that's already been taxed, get no upfront deduction, and in exchange every qualified withdrawal in retirement — your original contributions and every dollar of investment growth — comes out completely tax-free. This calculator uses the exact same compound-growth math as a Traditional IRA projection; the entire point of a separate Roth page is that tax outcome, not different arithmetic.

Why "Tax-Free Growth" Is the Whole Story Here

Look at the "Total Tax-Free Growth" figure in the results above — in a Traditional IRA, that identical dollar amount would eventually be taxed as ordinary income on withdrawal. In a Roth, it simply isn't, assuming the withdrawal is qualified (generally: the account has been open at least 5 years, and you're at least 59½). Over a multi-decade projection, growth is usually the largest single piece of the final balance, which is exactly why the Traditional-vs-Roth choice matters more the longer money stays invested — you're choosing which portion of a much larger future number gets taxed, not just which portion of today's contribution does.

The Compound Growth Formula

The math is identical to any compound-growth account: your starting balance grows on its own, and each contribution grows for whatever time remains once it's made.

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

The calculator simulates this month by month rather than plugging directly into the formula, so the year-by-year table and chart show an exact running balance at every step.

The Five-Year Rule and Contribution Ordering

Two timing rules decide what you can pull out of a Roth without tax. First, the account's five-year clock generally starts on January 1 of the tax year of your first Roth IRA contribution, and earnings only come out tax-free once that clock has run and a qualifying condition such as reaching age 59½ is met. Second, withdrawals are treated as coming out in a set order: your regular contributions first, then converted amounts, then earnings. Because contributions come out first and were already taxed, you can generally take them back at any time without tax or penalty — it is the earnings that carry the conditions. Conversions have their own separate five-year timing for the early-withdrawal penalty, so check IRS Publication 590-B if you have converted.

No Required Withdrawals for the Original Owner

A Traditional IRA forces annual required minimum distributions once you reach the IRS's starting age; a Roth IRA does not require them from the original owner during their lifetime. That means the balance projected above can keep compounding for as long as you choose to leave it, and can be passed to heirs, who generally face their own distribution rules. This flexibility is a main reason people with a long time horizon or estate-planning goals look at a Roth.

How Fees Interact With Tax-Free Growth

The optional Expense Ratio field subtracts a fund's annual fee from your expected return before projecting, so the "Projected Tax-Free Balance" is an after-fee number. A fee compounds against you just as returns compound for you, and since qualified Roth withdrawals carry no tax, there is no later deduction to soften its cost. Leave the field at 0 if you don't yet know your funds' expense ratios.

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

Under the default inputs the balance lands near 701,400 dollars, made up of about 200,000 dollars you contributed and about 501,400 dollars of growth. The contribution portion was taxed before it went in, so it can generally be withdrawn at any time. The growth portion is where the qualified-withdrawal conditions apply: if they are met, the full 701,400 dollars is tax-free, whereas the same balance in a Traditional IRA would be taxable as it came out.

Income Limits: The Catch With Roth IRAs

Unlike a Traditional IRA, Roth IRA eligibility isn't unconditional — contribution limits phase out and eventually disappear above certain income thresholds, which vary by filing status and are adjusted periodically. Higher earners may be ineligible to contribute directly at all (though other strategies, like a "backdoor" conversion, described below, exist for some situations). The reference table below shows the approximate 2026 MAGI (Modified Adjusted Gross Income) phase-out ranges — always check the current-year IRS income limits for your filing status before assuming you qualify to contribute directly.

Below the low end of your range, you can contribute the full amount; above the high end, you're ineligible to contribute directly at all; in between, your allowed contribution phases out proportionally. These figures adjust most years for inflation — verify the current-year figures with the IRS before relying on them.

How the Backdoor Roth Works

A "backdoor" Roth is a two-step workaround for savers whose income exceeds the direct-contribution limit above: first, contribute to a Traditional IRA (which has no income limit on the contribution itself, though the deduction may phase out), then convert that Traditional IRA balance to a Roth IRA shortly after. The conversion itself is generally taxable only on any investment growth or pre-tax balance that existed at the time of conversion — converting a brand-new, non-deductible contribution with little or no growth yet typically triggers little or no additional tax. This strategy has real complications worth knowing about before attempting it: the IRS's "pro-rata rule" treats all of your Traditional IRA balances (across every Traditional IRA you own) as one pool when calculating the taxable portion of a conversion, which can create an unexpected tax bill if you already hold other pre-tax IRA funds. This calculator doesn't model the backdoor Roth process itself — consult a tax professional before attempting one.

Common Roth IRA Mistakes

Treating a Roth as automatically superior ignores that the choice hinges on whether your tax rate will be higher now or later, which no one knows in advance. Pulling out earnings before the five-year clock and age conditions are met can create tax and a penalty on that growth, even though contributions themselves come out first. Contributing when your income is above the eligibility range can create an excess contribution that the IRS penalizes until it is corrected, so verify eligibility before you fund the account, not after.

Roth IRA Terms You Should Know

Qualified Withdrawal — a Roth withdrawal that meets the IRS's tax-free conditions: the account has been open at least 5 years, and the owner is at least 59½ (with some exceptions).

After-Tax Contribution — money contributed after income tax has already been paid on it, which is how every Roth contribution is funded.

Income Phase-Out — the income range over which your allowed Roth contribution shrinks toward zero, based on your filing status.

Backdoor Roth — a strategy some higher-income savers use (contributing to a Traditional IRA, then converting it to a Roth) to get money into a Roth despite exceeding the direct contribution income limit — see "How the Backdoor Roth Works" above for the mechanics and its pro-rata-rule complication.

Roth Conversion — moving money from a Traditional retirement account into a Roth, paying ordinary income tax on the converted amount now in exchange for tax-free growth afterward.

Five-Year Rule — the holding-period test that, together with a qualifying event such as age 59½, decides whether Roth earnings can be withdrawn tax-free.

Ordering Rules — the IRS sequence in which Roth withdrawals are treated: contributions first, then conversions, then earnings.

Sources & Further Reading

• IRS — Roth IRAs: the IRS page on Roth eligibility, contributions, and qualified distributions.
• IRS — Publication 590-A, Contributions to IRAs: the detailed rules on contribution limits and Roth income phase-outs.
• IRS — Publication 590-B, Distributions from IRAs: the rules on Roth withdrawals, the five-year rule, and ordering.

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 and income limits with the IRS.