Roth IRA Calculator

Project your Roth IRA growth with tax-free compounding. See how annual contributions and investment returns build your retirement savings over time.

What Is a Roth IRA?

A Roth IRA is an individual retirement account where you contribute after-tax dollars. The key benefit is that your investments grow tax-free, and qualified withdrawals in retirement are also completely tax-free. This makes the Roth IRA one of the most powerful retirement savings tools available to US investors.

Unlike a traditional IRA or 401k, you do not get a tax deduction when you contribute. Instead, you pay taxes upfront and never pay taxes on the growth. If you expect to be in a higher tax bracket in retirement — or if tax rates rise — a Roth IRA can save you significantly more than a traditional pre-tax account.

Tax-Free Growth

Inside a Roth IRA, dividends, interest, and capital gains are never taxed as long as you follow the rules. Compare this to a taxable brokerage account where you owe taxes on dividends each year and capital gains when you sell. Over decades, the tax savings compound dramatically.

For example, $7,000 invested annually at 7% for 35 years grows to roughly $1.1 million in a Roth IRA — all of which you can withdraw tax-free. In a taxable account with the same returns, taxes on dividends and gains along the way would reduce your final balance by tens of thousands of dollars.

2024 Contribution Limits

For 2024, the annual Roth IRA contribution limit is $7,000 if you are under 50, and $8,000 if you are 50 or older (the extra $1,000 is a catch-up contribution). These limits apply across all your IRAs combined — if you also have a traditional IRA, the total contributions to both cannot exceed the limit.

Excess contributions are subject to a 6% penalty for each year they remain in the account. This calculator shows a warning if your entered contribution exceeds the current limit, but still runs the projection so you can model different scenarios.

Income Limits

Roth IRA contributions are subject to income limits. For 2024, single filers with modified adjusted gross income (MAGI) above $161,000 cannot contribute directly, and contributions begin to phase out above $146,000. For married filing jointly, the phase-out range is $230,000 to $240,000.

High earners who exceed these limits can still fund a Roth IRA through a backdoor Roth conversion — contributing to a traditional IRA and then converting to a Roth. This strategy is legal and widely used, though it has its own tax implications.

Roth IRA vs Traditional IRA

The core difference is when you pay taxes. With a traditional IRA, you get a tax deduction now but pay income tax on withdrawals in retirement. With a Roth IRA, you pay taxes now but withdraw tax-free later. The Roth is generally better if you expect your tax rate to be higher in retirement, or if you value the certainty of knowing your retirement income is tax-free.

Roth IRAs also have more flexible withdrawal rules. You can withdraw your contributions (not earnings) at any time without penalty or taxes. There are no required minimum distributions (RMDs) during your lifetime, making the Roth IRA an excellent estate planning tool.

The 5-Year Rule

To withdraw earnings tax-free, your Roth IRA must have been open for at least 5 years and you must be at least 59½. If you withdraw earnings before meeting both conditions, you may owe income tax and a 10% early withdrawal penalty on the earnings portion.

For a broader view of employer-sponsored retirement savings, see our 401k Calculator. To model whether your combined savings will sustain your desired retirement income, try the Retirement Calculator.