SamCalculator

Roth IRA Calculator

Estimate future Roth IRA growth and compare tax-free retirement savings with a regular taxable investment account.

Account Balances

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2026 limit: $7,500 (under 50) / $8,500 (50+)

Growth Assumptions

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Tax

Applied to taxable account gains each year
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What Is a Roth IRA?

A Roth IRA is a U.S. individual retirement account funded with after-tax dollars. You contribute money that has already been taxed, and in exchange the IRS waives tax on everything that happens inside the account afterward: interest, dividends, capital gains, withdrawals after age 59½ — all of it tax-free, provided the five-year holding rule is satisfied.

Roth IRAs sit alongside the other major U.S. retirement vehicles — traditional IRAs and 401(k)s — and play a specific role: locking in today's tax rate on a slice of your retirement savings, then never paying federal tax on that money again.

How a Roth IRA Works

Contribution phase

Each year you contribute up to the IRS limit (in 2026: $7,500, or $8,500 if you're 50 or older). Contributions come from after-tax income — there's no upfront deduction.

Growth phase

Whatever you hold inside the Roth — index funds, ETFs, bonds, individual stocks — compounds with zero annual tax drag. Interest, dividends, and capital gains stay inside the account.

Withdrawal phase

After age 59½, and once the account has been open for five tax years, every dollar comes out tax-free — including all of the growth. Contributions themselves can be withdrawn at any age, tax- and penalty-free.

No RMDs

Unlike traditional IRAs and 401(k)s, Roth IRAs have no Required Minimum Distributions during the owner's lifetime — money can stay invested and growing as long as you want.

2026 Roth IRA Contribution Limits

YearUnder Age 50Age 50 or Older
2022$6,000$7,000
2023$6,500$7,500
2024$7,000$8,000
2025$7,000$8,000
2026$7,500$8,500

These are combined limits across all IRAs (Roth and traditional). Contributions are further reduced or disallowed above the published modified adjusted gross income (MAGI) phase-out ranges, which the IRS updates annually for inflation.

Roth IRA Eligibility

  • Earned income — wages, salary, self-employment income, or spousal income filed jointly. Investment income alone doesn't qualify.
  • Income limits — single filers begin phasing out around $150,000 MAGI and are fully out near $165,000. MFJ phases out around $236,000–$246,000.
  • No age cap — you can contribute at any age as long as you have earned income (the old over-70½ rule was removed by the SECURE Act).
  • Catch-up contributions — once you turn 50, you can add an extra $1,000 per year on top of the standard limit.
  • Above the MAGI cap? A "backdoor Roth IRA" — contribute to a traditional IRA, then convert — is the workaround commonly used by high-income earners.

Roth IRA vs. Traditional IRA

FeatureRoth IRATraditional IRA
Contribution tax treatmentAfter-tax (no deduction)Pre-tax (deductible, subject to limits)
GrowthTax-freeTax-deferred
Qualified withdrawalsTax-free at 59½+ (5-year rule)Taxed as ordinary income
Required Minimum DistributionsNone during owner's lifetimeRequired starting age 73
Early withdrawal of contributionsAnytime, tax- & penalty-free10% penalty plus tax
Best whenLower bracket today than expected at retirementHigher bracket today than expected at retirement

Roth IRA vs. Taxable Brokerage Account

FeatureRoth IRATaxable Account
Tax on growthNone — tax-freeTaxed annually on interest, dividends, and realized gains
Tax on withdrawalNone (qualified)Capital gains tax on appreciation
Contribution limitsCapped by IRS each yearUnlimited
Flexibility (early access)Contributions yes; earnings restrictedFully flexible anytime
Early withdrawal penalty10% on earnings before 59½None
Estate / step-up benefitInherited Roth keeps tax-free statusBeneficiaries get step-up in basis

The Power of Starting Early

Roth IRAs reward time more than they reward contribution size. Because every dollar of growth is permanently tax-free, the compounding advantage stacks. A 25-year-old contributing $5,000 a year through age 65 at 7% ends up with roughly $1.07M tax-free; the same person waiting until 35 ends with about $505K — half as much, for skipping ten early years. The longer the runway, the larger the gap.

For one-time investment projections, see our Compound Interest Calculator. For broader retirement-corpus planning, the Retirement Calculator covers withdrawal rates and how long your money will last.

Withdrawal Rules and the Five-Year Rule

A qualified Roth withdrawal — fully tax- and penalty-free — requires two things: you're at least 59½, and the Roth account has been open for at least five tax years. The five-year clock starts January 1 of the tax year of your first Roth contribution and applies across all Roth IRAs you own, not each one separately.

Contributions can always be withdrawn tax- and penalty-free. Earnings are different — pull them out before either condition is met and you generally owe ordinary income tax plus a 10% penalty, with documented exceptions for first-home purchase (up to $10,000), qualified higher education, disability, birth or adoption, certain unreimbursed medical expenses, or substantially equal periodic payments.

Common Roth IRA Mistakes

  • Leaving cash uninvested. A Roth IRA is a container — you still have to choose investments inside it. Money sitting as cash earns the same interest rate as a savings account, with none of the long-term growth.
  • Contributing while over the income limit. The 6% excess contribution tax compounds annually until removed.
  • Skipping the catch-up contribution at 50. An extra $1,000 a year for 15 years at 7% is roughly $26,000 of additional tax-free retirement wealth.
  • Treating it like a checking account. While contributions can be withdrawn anytime, doing so permanently loses the tax-free compounding space the IRS gave you.
  • Forgetting beneficiary designations. Inherited Roth IRAs keep their tax-free status — but only when the beneficiary line is filled in.

Retirement Planning Strategies

  • 1.Capture the employer 401(k) match first. A 100% match is an immediate return no Roth can equal — then redirect the next dollars into the Roth IRA up to the IRS limit.
  • 2.Diversify by tax bucket. Holding pre-tax (401(k)), Roth (Roth IRA), and taxable (brokerage) assets gives you flexibility to manage tax brackets in retirement.
  • 3.Use Roth conversions in low-income years. A gap year, an early retirement before Social Security, or a year with large deductions can be ideal windows to convert pre-tax savings into a Roth at a temporarily lower bracket.
  • 4.Don't time the market — automate. Setting a monthly contribution that totals the annual limit removes timing risk and ensures the cap is fully used each year.
  • 5.Pair with an Investment Calculator and Annuity Calculator to build a full retirement picture that includes growth, income, and longevity protection.

Core Formulas

Future value with contributions

FV = P(1 + r)n + PMT · [((1 + r)n − 1) / r]

Taxable account after-tax return

rafter-tax = r · (1 − tax rate)

P = current balance

r = expected annual return (decimal)

n = years to retirement (retirement age − current age)

PMT = annual contribution (paid at end of each year)

tax rate = your marginal income tax rate (decimal)

The Roth IRA grows at the full rate r every year. The taxable account grows at the after-tax rate, because interest, dividends, and gains are taxed annually at your marginal rate. Over long horizons this annual tax drag is what creates the headline gap between the two account types.

Why This Tool Matters

The single most powerful idea in personal finance is also the most boring: tax-advantaged compounding over decades. Visualizing that compounding makes it real. Seeing $300K of "lost growth" line up beside the Roth balance at age 65 — purely from annual tax drag — turns an abstract policy choice into a concrete number you can act on this year.

Use this projection to sanity-check your contribution plan, to pressure-test the return assumptions, and to see how each input (more contributions, more years, a lower tax rate, a higher return) widens or narrows the Roth advantage.

Disclaimer: Projections are educational estimates only and assume a single fixed annual return for both account types. Real-world Roth IRA and taxable account performance depends on market returns, contribution limits, IRS rule changes, income eligibility, investment choices, fee structures, and current tax laws. SamCalculator does not provide tax or investment advice — consult a fiduciary CFP, CPA, or licensed financial adviser before making retirement decisions.

Frequently Asked Questions

A Roth IRA is a U.S. individual retirement account funded with after-tax dollars. The trade-off is simple: you pay tax on the contribution today, but every dollar of growth — interest, dividends, and capital gains — and every qualified withdrawal after age 59½ is federally tax-free. That makes it one of the most efficient long-term retirement vehicles available, especially for younger savers with decades of compounding ahead. Annual contributions are capped, income limits apply, and the account must be open for at least five years before earnings can be withdrawn tax-free.

Inside a Roth IRA, you owe no federal tax on interest, dividends, or capital gains each year, and no federal tax on qualified withdrawals at retirement. In a regular taxable brokerage account, by contrast, gains are taxed annually — interest and short-term gains at your ordinary income rate, dividends and long-term gains at 0%, 15%, or 20%. Over 25–35 years, removing that annual tax drag is what creates the headline difference between the two account types you see in this calculator.

For tax year 2026 the IRS allows up to $7,500 in Roth IRA contributions if you're under 50, and $8,500 if you're 50 or older (the extra $1,000 is the catch-up contribution). These are combined limits across all your IRAs — Roth and traditional together — and apply only if your modified adjusted gross income is below the published phase-out ranges. The calculator's Maximize Contributions toggle applies these limits each year and automatically switches to the catch-up amount once you turn 50.

Yes. Roth IRA contributions (the principal you put in with after-tax dollars) can be withdrawn at any age, for any reason, with no tax and no penalty — because you already paid tax on them. Earnings are different: pulling out earnings before age 59½ or before the account has been open five years usually triggers ordinary income tax plus a 10% early withdrawal penalty, with limited exceptions for first-home purchase, qualified education expenses, birth or adoption, disability, or certain medical costs.

There are actually two five-year clocks. The first applies to the account itself: earnings can only be withdrawn tax-free once you've held any Roth IRA for at least five tax years, even after age 59½. The second applies to each Roth conversion: converted balances must season for five years before they can be withdrawn penalty-free if you're under 59½. Both clocks start January 1 of the tax year of the first contribution or conversion, so a contribution made in April 2026 for the 2025 tax year counts as starting on January 1, 2025.

For long-term retirement savings, almost always — and this calculator shows why. Same contributions, same returns, the only difference is taxation: a Roth shields all gains from federal tax, while a taxable account loses a slice each year to interest, dividend, and capital-gains tax. Over a 30-year horizon, even a modest 25% marginal rate can produce a six-figure gap. A taxable brokerage account is still useful when you've maxed out tax-advantaged accounts or want money accessible before age 59½, but for retirement money specifically, the Roth almost always wins.

Excess contributions are taxed 6% per year, every year, until removed. You have two clean fixes: withdraw the excess plus the attributable earnings by your tax filing deadline (including extensions), or absorb the excess into a future year's contribution limit. The simplest preventive move is to fund the account at year-end rather than at the start, and to monitor whether your income approaches the phase-out range — partial phase-out automatically lowers the limit you can use, and over-contributing into a phase-out is the most common cause of excess contributions.

Yes — a Roth IRA is a tax wrapper, not an investment. Whatever you hold inside it — stock funds, bond funds, individual securities, even cash — can rise and fall with the market. Diversified low-cost index funds with a long time horizon are the most common approach, because the tax-free growth advantage compounds best across decades. The projections in this calculator assume a steady annual return; real-world returns are volatile, so the year-by-year balance bounces around the projection line rather than tracking it smoothly.

A Roth conversion moves money from a pre-tax retirement account (traditional IRA, 401(k), 403(b)) into a Roth IRA. You pay ordinary income tax on the converted amount in the year you convert, but from that point forward all growth and qualified withdrawals are tax-free. Conversions are most attractive when you're in a temporarily low tax bracket — a gap year between jobs, early retirement before Social Security and RMDs begin, or a year with large deductions — because you trade taxes today (at a low rate) for tax-free growth and withdrawals later.

If you can fund the full IRS limit ($7,500 in 2026, $8,500 if 50+), do — the long-term tax-free compounding is hard to replicate elsewhere. If that's not realistic, the common priority order is: capture your 401(k) employer match in full, then max the Roth IRA, then return to maxing the 401(k). Even partial contributions started early beat large contributions started late: $3,000 a year for 35 years compounded at 6% finishes near $355,000 — typically more than $7,500 a year for the last 10 years before retirement.

Combine this with the Retirement Calculator for a full retirement-corpus picture, the Inflation Calculator to stress-test purchasing power, and the Compound Interest Calculator for a simpler one-time investment projection.

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