Roth IRA Calculator

What is a Roth IRA?

A Roth IRA is a retirement account contributed to with after-tax dollars. While you get no immediate tax deduction, your investments grow tax-free, and you can withdraw your money tax-free in retirement (after age 59½ and holding the account for 5 years).

Contribution Limits (2024-2025)

The annual contribution limit is $7,000 for those under 50 and $8,000 for those 50 and older (catch-up contribution). These limits are subject to income eligibility. High earners may need to use a "Backdoor Roth" strategy.

Roth IRA vs. Traditional IRA

• Tax Treatment: Roth contributions are post-tax (tax-free withdrawal). Traditional contributions are pre-tax (taxed on withdrawal).
• RMDs: Roth IRAs do not have Required Minimum Distributions (RMDs) during the owner's lifetime, allowing your money to grow indefinitely.
• Flexibility: You can withdraw your *contributions* (not earnings) from a Roth IRA at any time, penalty-free and tax-free.

Why Start Early?

The power of compound interest is most effective over long periods. As shown in the calculator, a small difference in starting age can result in hundreds of thousands of dollars difference in the final balance due to exponential growth.