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 in exchange, your investments grow tax-free, and qualified withdrawals in retirement are entirely tax-free. For many savers, especially younger ones, that trade is extraordinarily valuable.

The magic of a Roth lies in sheltering compound growth from taxes. In a regular taxable account, dividends and capital gains are taxed along the way and when you sell, dragging on returns year after year. In a Roth, decades of compounding happen with no tax drag, and you never owe tax on the gains. Over a 30- or 40-year horizon, the difference between tax-free and taxable growth can amount to a very large sum — which is exactly what this calculator illustrates by comparing the two side by side.

Roth IRAs have rules worth knowing. Annual contributions are capped by the IRS, with a higher limit for those 50 and older, and the ability to contribute phases out at higher income levels. Because contributions are made with money you've already paid tax on, you can withdraw your own contributions (not the earnings) at any time without tax or penalty, which gives a Roth unusual flexibility. To withdraw earnings tax-free, you generally must be at least 59½ and have had the account for five years.

A major advantage over traditional accounts is that Roth IRAs have no required minimum distributions during the original owner's lifetime, so the money can keep growing tax-free for as long as you like and can be a powerful estate-planning tool. The Roth is generally most advantageous when you expect to be in the same or a higher tax bracket in retirement, or simply value the certainty of tax-free income and the flexibility it provides.

Whether you use a Roth alongside a 401(k), or as your primary retirement account, the core lesson is the same: starting early and letting tax-free compounding run for decades is one of the most efficient ways to build retirement wealth. This calculator shows just how much that tax-free advantage can be worth.