Roth IRA Calculator

How a Roth IRA Grows: Tax-Free Compounding

The Roth IRA calculator projects your account balance using compound interest on after-tax contributions. "Roth IRA calculator" gets 135K monthly searches (CPC: $3.36). Unlike traditional IRAs, all qualified Roth withdrawals in retirement are completely tax-free. Formula: FV = P × [(1+r)^n − 1] / r, where P = annual contribution, r = annual return rate, n = years.

Starting at 25, contributing $7,000/year at 7% return, retiring at 65 (40 years): FV = $7,000 × [(1.07)^40 − 1] / 0.07 = $7,000 × 199.6 = $1,397,000. Total contributed: $280,000. Tax-free earnings: $1,117,000.

2024 Roth IRA Contribution and Income Limits

• Contribution limit 2024: $7,000/year (up from $6,500 in 2023)
• Age 50+ catch-up: $8,000/year (+$1,000)
• Single — full contribution: MAGI below $146,000
• Single — phase-out: $146,000–$161,000 (reduced contribution)
• Married filing jointly — full: MAGI below $230,000
• Married filing jointly — phase-out: $230,000–$240,000
• Backdoor Roth: High earners above limits can make non-deductible traditional IRA contributions and convert to Roth

Roth IRA Balance Projections at Retirement

Assuming maximum contributions ($7,000/year), 7% average annual return:

• Start age 22, retire 65 (43 years): ~$1,619,000
• Start age 25, retire 65 (40 years): ~$1,316,000
• Start age 30, retire 65 (35 years): ~$937,000
• Start age 35, retire 65 (30 years): ~$661,000
• Start age 40, retire 65 (25 years): ~$458,000
• Starting 10 years earlier more than doubles your final balance at the same contribution amount

Roth IRA vs Traditional IRA

• Choose Roth if: Young/lower income now (expect higher brackets later), want tax-free income in retirement, want to avoid Required Minimum Distributions, or doing backdoor conversion strategy
• Choose Traditional if: High income now (need current deduction), expect lower bracket in retirement, or state income tax deduction available on contributions
• Tax diversification: Having both Roth and Traditional accounts gives flexibility to manage taxable income in retirement

Frequently Asked Questions

Can I withdraw Roth IRA contributions before 59½?

Yes — contributions (not earnings) can be withdrawn anytime, any age, penalty-free and tax-free. Only the earnings portion faces the 10% early withdrawal penalty if you are under 59½ and the account is under 5 years old. This flexibility makes Roth IRAs a powerful dual-purpose savings vehicle.

What is the Roth IRA 5-year rule?

You must have had a Roth IRA open for 5 years AND be 59½+ to withdraw earnings completely tax and penalty-free. The 5-year clock starts January 1 of the year you opened your first Roth IRA. Contributions always come out penalty-free regardless of the 5-year rule.

What is the backdoor Roth IRA?

High earners above income limits can still contribute: (1) Make a non-deductible traditional IRA contribution (no income limit). (2) Convert immediately to Roth (no income limit on conversions). This strategy is legal, widely used, and IRS-acknowledged. The "pro-rata rule" applies if you have existing pre-tax traditional IRA balances — consult a tax advisor if so.