Roth IRA Calculator
Project tax-free Roth IRA growth and compare it against a taxable account.
Inputs
2024 limits: $7,000 (under 50), $8,000 (50+).
Used to compute the after-tax cost of contributions and the taxable-account comparison.
Applies to traditional IRA withdrawals in the comparison. A higher future rate favours the Roth.
Effective rate on annual investment income in a taxable account (dividend + cap gains).
Roth IRA Value at Retirement
$1,073,120
Traditional IRA (After-Tax Value)
$1,031,846
Taxable Account Value
$823,950
Roth vs Traditional Advantage
$41,274
Positive = Roth wins; negative = Traditional wins.
Roth vs Taxable Advantage
$249,170
Total After-Tax Contributions
$225,000
Tax-Free Growth
$848,120
Years of Growth
35
Step by step
Years of tax-free compounding
= 35 years
Roth IRA future value (all tax-free at withdrawal)
FV($15,000, $500/mo, 7%/yr, 35 yrs)
= $1,073,120
Traditional IRA after-tax value (taxed at withdrawal at 25%)
$1,375,794 × (1 − 25%)
= $1,031,846
Taxable account value (gains taxed at 15% annually)
= $823,950
Roth advantage over traditional IRA (after tax)
$1,073,120 − $1,031,846
= $41,274
Roth wins because your future tax rate is higher than today's rate.
How it works
The Roth IRA's advantage comes from tax-free compounding: you pay tax now on contributions, but every dollar of growth is permanently tax-free. The winner between Roth and Traditional IRA depends entirely on whether your tax rate will be higher today or in retirement. If you expect to be in a higher bracket later, the Roth wins because you're locking in today's lower rate on contributions. The traditional IRA comparison normalises for the tax deduction by growing the equivalent pre-tax amount, then applying retirement taxes.
Formulas
Roth future value
Roth FV = Current balance × growth + Monthly contribution × growth factor
- PV
- Current Roth balance
- C
- Monthly contribution (after-tax)
- r
- Monthly return rate
- n
- Months to retirement
Traditional IRA after-tax comparison
Traditional after-tax = Pre-tax balance × (1 − retirement tax rate)
- t_ret
- Expected marginal rate in retirement
2024 contribution limits and tax rules are used. Limits are indexed to inflation annually. Consult a tax advisor for Roth conversion and eligibility questions.
Frequently Asked Questions
Should I choose Roth or Traditional IRA?
If you expect your tax rate to be higher in retirement than today, choose Roth. If you expect a lower rate in retirement, choose Traditional. Early-career savers are often in lower brackets now — a strong case for Roth. Compare the 'Roth vs Traditional Advantage' result to see which wins at your assumed rates.
What is the 2024 Roth IRA contribution limit?
For 2024: $7,000 per year if under age 50, $8,000 if you're 50 or older (the extra $1,000 is the catch-up contribution). There are income limits for direct Roth contributions — if you exceed the phase-out range, you may use a backdoor Roth strategy.
When can I withdraw Roth IRA earnings tax-free?
To withdraw earnings tax and penalty-free, the account must be at least 5 years old AND you must be 59½ or older (or meet another qualifying exception). Contributions (not earnings) can always be withdrawn tax and penalty-free.
What is the taxable account comparison?
A taxable brokerage account with the same contributions grows at the same gross return, but investment income (dividends, capital gains distributions) is taxed each year. The tax drag reduces the effective growth rate and compounds against you over decades. The Roth's tax-free growth typically makes it far more valuable over long horizons.