Roth IRA Calculator

The Roth IRA calculator compares a Roth IRA against a taxable investment account to project which one better supports retirement savings under a given set of assumptions. Current balance, annual contribution, expected rate of return, and both current and retirement age turn into a year-by-year projection of growth, interest earned, and taxes paid. Comparing the two account types is how a contribution plan gets set, a tax impact gets evaluated, and the long-term effect of compound growth becomes visible.

Current balance, annual contribution (or a maximized-contribution option using current IRS limits), expected rate of return, current age, retirement age, and marginal tax rate together drive parallel projections for a Roth IRA and a taxable account. Results include Balance at Retirement, Total Principal, Total Interest, Total Tax on the taxable account, and the Difference in Final Value between the two, alongside an Annual Schedule showing year-by-year growth for principal, Roth IRA balance, and taxable balance. Saved inputs carry over between visits for quick repeat comparisons.

• Plan retirement savings and compare Roth IRA vs taxable account outcomes for different return and tax assumptions.
• Test contribution strategies and see how maximizing contributions changes the final balance at retirement.
• Model tax drag in a taxable account and estimate how annual taxes reduce compounding over time.
• Explore time horizons by adjusting current and retirement ages to gauge the benefit of starting earlier.
• Support financial education by visualizing compound interest and after-tax returns for personal finance learning.

A baseline scenario with a starting balance and steady contributions compares Roth IRA and taxable growth under a shared set of assumptions. Raising the marginal tax rate shows how higher taxes reduce the taxable account's ending value, without touching the Roth IRA figure at all. Raising the expected rate of return benefits both accounts through compounding, though the Roth IRA preserves more of that gain since qualified withdrawals are tax-free. Using the maximized-contribution option instead of a fixed annual amount shows the effect of contributing at the current IRS limit. Shortening the time horizon tests a late-start scenario and shows the contribution level needed to reach a target balance by a given retirement age.

Balance at Retirement is the total projected value for each account type. Total Principal is the sum contributed overall. Total Interest shows how much compounding grew the savings beyond contributions. Total Tax, for the taxable account, quantifies the tax drag on its returns. Difference in Final Value shows which option produced the higher ending balance under the entered assumptions.

Annual compounding applies to both accounts in parallel. The Roth IRA grows tax-free and adds the annual contribution at each period with no tax deduction along the way. The taxable account calculates yearly interest, applies tax at the marginal tax rate, and then adds the annual contribution, so its growth compounds on a smaller after-tax base each year. The annual schedule records year-by-year values so principal, interest, and taxes can be tracked against each other across the full timeline.

Does the calculator include contribution limits? Yes. The maximized-contribution option applies built-in annual limits and a higher catch-up amount for older savers.

Does the calculator model investment fees? No. Lowering the expected rate of return approximates the effect of fees.

Are Roth IRA withdrawals always tax-free? Qualified withdrawals are tax-free when the rules are met. IRS guidance or a tax professional can confirm eligibility for a specific situation.

Does the taxable account use capital gains rates? No, the model applies the marginal tax rate as a simple annual tax on interest to illustrate tax drag.

This tool is intended for informational and educational purposes only. It does not provide financial, investment, or tax advice. The amounts and payments shown are estimates and may not reflect actual figures. Results are not guaranteed and may vary based on individual circumstances. Always consult a qualified financial advisor before making any financial decisions.