What Is a Roth IRA Calculator?
A Roth IRA calculator helps estimate how tax-free retirement savings grow compared to a taxable investment account. It shows how contributions, compounding, and taxes affect your final balance.
How Roth IRA Growth Works
Roth IRA contributions grow tax-free. The formula used is:
Future Value = (Current Balance + Contribution) × (1 + r)
Roth IRA vs Taxable Account
In taxable accounts, annual gains are reduced by taxes. In Roth IRAs, qualified withdrawals are tax-free — potentially saving thousands over decades.
Example Comparison
Investing $6,500 annually at 7% for 35 years can produce over $1M in a Roth IRA, while a taxable account may lose significant value to annual capital gains tax.
Why Marginal Tax Rate Matters
The higher your tax rate, the more advantage a Roth IRA provides over taxable investing.
Should You Maximize Contributions?
Maximizing IRS contribution limits accelerates long-term tax-free compounding.
Who Should Use This Calculator?
- Long-term investors
- Young professionals
- Retirement planners
- High-income earners evaluating tax strategies
Key Benefits of Roth IRA
- Tax-free withdrawals
- No required minimum distributions
- Flexible estate planning
Limitations
- Income eligibility limits
- Contribution caps
- Early withdrawal penalties