Roth IRA Calculator

A Roth IRA is an individual retirement account funded with after-tax dollars. Unlike a traditional IRA or 401(k), you get no tax deduction when you contribute — but your money grows completely tax-free, and qualified withdrawals in retirement are 100% tax-free, including all the investment gains. There are no required minimum distributions (RMDs) during your lifetime, and you can withdraw your original contributions (not earnings) at any time without penalty. Roth IRAs are especially valuable if you expect to be in a higher tax bracket in retirement than you are today.

For 2025, the Roth IRA contribution limit is $7,000 per year if you are under age 50. If you are age 50 or older, you can make an additional $1,000 catch-up contribution for a total of $8,000 per year. These limits apply to the combined total across all of your traditional and Roth IRAs — you cannot contribute $7,000 to each. Contributions must be made by the tax filing deadline (typically April 15 of the following year). You must have earned income at least equal to your contribution amount.

For 2025, the ability to make direct Roth IRA contributions phases out based on your modified adjusted gross income (MAGI). For single filers, the phase-out range is $150,000–$165,000; above $165,000, you cannot contribute directly. For married filing jointly, the phase-out range is $236,000–$246,000; above $246,000, direct contributions are not allowed. If your income exceeds these limits, you may still be able to make contributions via the 'backdoor Roth IRA' strategy — contributing to a non-deductible traditional IRA and then converting it to a Roth. Consult a tax advisor for your specific situation.

The core difference is when you pay taxes. With a traditional IRA, contributions may be tax-deductible (reducing your taxable income today), but withdrawals in retirement are taxed as ordinary income. With a Roth IRA, contributions are made with after-tax money (no deduction), but qualified withdrawals in retirement are completely tax-free. A Roth IRA also has no required minimum distributions during your lifetime, giving you more flexibility in retirement. Generally, a Roth IRA is better if you expect to be in a higher tax bracket in retirement; a traditional IRA is better if you expect to be in a lower bracket. Young investors with lower current incomes often benefit most from a Roth.

Yes — one of the biggest advantages of a Roth IRA is that you can withdraw your original contributions (not earnings) at any time, at any age, without taxes or penalties. This makes the Roth IRA a useful emergency fund backup. However, withdrawing earnings before age 59½ and before the account has been open for at least 5 years may trigger income tax plus a 10% early withdrawal penalty. There are exceptions to the penalty for first-time home purchase (up to $10,000 lifetime), higher education expenses, disability, and certain other situations. To maximize the tax-free compounding benefit, it is generally best to avoid withdrawing from a Roth IRA until retirement.

You do not necessarily have to choose — many financial advisors recommend contributing to both. A common strategy is to contribute enough to your 401(k) to capture the full employer match first (because that is a guaranteed 50–100% return on your contribution), then direct additional savings to a Roth IRA for tax-free growth flexibility. Choose a Roth IRA when you are in a low tax bracket now and expect to be in a higher one later, when you want tax diversification in retirement, or when you want to avoid RMDs. The 401(k) has much higher contribution limits ($23,500 in 2025 vs. $7,000 for an IRA), so high earners trying to maximize retirement savings will generally want to use both.