Roth IRA Calculator

Why the Roth IRA is such a powerful tool

A Roth IRA is a personal retirement account you fund with money that has already been taxed. In exchange for skipping the tax break today, every dollar of growth and every qualified withdrawal in retirement comes out completely tax free. For most workers, that trade is one of the best long-term deals in the tax code.

The tax-free growth math

Suppose you contribute $7,000 a year for 30 years and earn 7 percent. You will end up with roughly $707,000, of which about $497,000 is pure growth. In a taxable account, some of that growth would be siphoned off every year by dividends and capital gains taxes. In a Roth, none of it is.

2025 contribution limits and phase-outs

The 2025 contribution limit is $7,000, or $8,000 if you are age 50 or older. The ability to contribute directly to a Roth phases out at higher incomes. For single filers, the phase-out runs from $150,000 to $165,000 of modified adjusted gross income. For married filing jointly it runs from $236,000 to $246,000. If you fall inside the range, you can make a reduced contribution. Above the top of the range, direct contributions are not allowed.

The 5-year rule you actually need to know

To pull earnings out completely tax and penalty free, two things must be true: the account must have been open for at least five tax years, and you must be at least 59 and a half (or meet another qualifying reason like a first home purchase up to $10,000). Contributions themselves can always be pulled out with no tax and no penalty, since you already paid tax on them.

Backdoor Roth in plain English

If you earn too much to contribute directly, there is a legal workaround. You make a nondeductible contribution to a traditional IRA, then convert those dollars to a Roth. The conversion has no income limit. The catch is the pro-rata rule: if you hold other pre-tax IRA money, part of the conversion will be taxable. Many high earners empty their pre-tax IRAs first by rolling them into a 401(k).

Roth vs traditional

Roth wins when you expect higher tax rates in the future or want maximum flexibility in retirement. Traditional wins when you need the deduction today and expect a lower bracket later. Younger workers early in their careers often lean Roth. Peak earners often lean traditional. Splitting contributions between the two is a reasonable hedge when you cannot decide.

These numbers are estimates. Tax laws and contribution limits change; verify current rules with the IRS or a tax professional.