Roth IRA Calculator
Roth IRA & Traditional Investment Accounts
- Roth IRA
- Taxable Account
Roth IRA Account
Taxable Investment Account
What You Should Know
- This Roth IRA growth Calculator enables you to estimate your account balance and savings over time when investing with a Roth IRA account.
- Roth IRA is an individual retirement plan that allows you to invest your money and get tax-free growth on your investments.
- There are certain limitations on how much a person can contribute annually to the account, and it depends on the individual income limits.
- Roth IRA account also puts a 10% penalty on all withdrawals that are ineligible, so you should make sure you are eligible before you withdraw funds from Roth IRA.
About This Roth IRA Growth Calculator
This Roth IRA calculator enables you to estimate the return on your investments made with a Roth IRA account. This calculator can help you estimate the allowed contributions for the account as well as interest on your investments and account balance at retirement. You need the following inputs to estimate your Roth IRA investments:
- Current Age: Your current age. You must be at least 18 years old to open a Roth IRA.
- Retirement Age: The age you are planning to retire. It is important to note that you may face penalties and taxes if you start withdrawing funds from your IRA before you are 59.5 years of age.
- Residence State: The state of your residence for tax purposes. This value is used to estimate your marginal tax rate.
- Gross Income: Your annual gross income. This value is used to estimate your marginal tax rate.
- Current Balance: The balance you currently have in your Roth IRA account. If you do not have a Roth IRA account, you should leave the current balance as zero.
- Annual Contribution: The amount you are planning to contribute to a Roth IRA account annually. Currently, the maximum annual contribution limit is $7,000.
- Annual Rate of Return: The rate of return you are expecting your investment to grow over time. On average, the stock market has returned 7% annually.
The results section of the calculator provides a graph of how your account is expected to grow in a tax-free Roth IRA account as well as in a taxable savings account. It also provides a breakdown of the account balance into contributions, interest and taxes for the Roth IRA account and for the taxable account.
What Is a Roth IRA?
A Roth IRA is a retirement account that allows people to invest their savings and receive the proceeds tax-free. This is a powerful investment account, but it comes with some limitations on contribution amount as well as on withdrawal. Understanding how Roth IRA works may help you receive exponential returns and avoid paying taxes on it.
There are currently two accounts available: Roth IRA and traditional IRA. Roth and traditional IRA accounts allow an individual to invest their savings tax free. The difference between the accounts is that Roth IRA contributions are after-tax while traditional IRA contributions are before-tax. After-tax contributions mean that a person pays taxes on paying income tax and then invests the money while before-tax contributions mean that a person invests their money and pays taxes at the time of withdrawal.
There are some limitations regarding how much a person can contribute each year towards the account. The maximum limit is usually determined by a person’s age and income as well as their filing status. The limit usually increases over time to catch up with inflation, but there is no clear understanding by how much the limit will increase in the future.
Roth IRA Contribution Limits for 2023 Chart
| Filing Status and Adjusted Gross Income | Contribution Limit By Age | |||
|---|---|---|---|---|
| Single Filers | Married Filing Jointly | Married Filing Separately | Age < 50 | Age >= 50 |
| Under $138,000 | $218,000 | $0 | 6,500 | 7,500 |
| $139,500 | $219,000 | $1,000 | 5,850 | 6,750 |
| $141,000 | $220,000 | $2,000 | 5,200 | 6,000 |
| $142,500 | $221,000 | $3,000 | 4,550 | 5,250 |
| $144,000 | $222,000 | $4,000 | 3,900 | 4,500 |
| $145,500 | $223,000 | $5,000 | 3,250 | 3,750 |
| $147,000 | $224,000 | $6,000 | 2,600 | 3,000 |
| $148,500 | $225,000 | $7,000 | 1,950 | 2,250 |
| $150,000 | $226,000 | $8,000 | 1,300 | 1,500 |
| $151,500 | $227,000 | $9,000 | 650 | 750 |
| $153,000 & More | $228,000 & More | $10,000 & More | 0 | 0 |
In addition to the limitations on contributions, a Roth IRA account has some limitations on withdrawal. Since Roth IRA is a retirement savings account with powerful tax deductions, the US government makes it difficult for people to exploit it before getting to the retirement age. Even though this account may enable people to get investment returns tax-free, a person may pay a lot in penalties if they withdraw the money too early.
If you withdraw interest on your money when you are not eligible for that, you may have to pay taxes on it as well as a 10% penalty on your withdrawal. You have to meet one of the following conditions to be eligible for a penalty-free Roth IRA withdrawal:
- You are at least of age 59½ when the withdrawal happens.
- The withdrawal funds are used for purchasing, renovating or building a first home for the Roth IRA holder or a qualified family member. This withdrawal is limited to $10,000 only.
- You have a disability when the Roth IRA withdrawal happens.
- The funds are distributed to the beneficiary of the Roth IRA in case the Roth IRA holder dies.