Roth IRA Calculator
Project your tax-free retirement savings. See how your Roth IRA grows with compound returns, contribution limits, catch-up contributions, and compare vs a Traditional IRA.
🥇 Roth IRA Growth Projector
Tax-free compounding at work
How a Roth IRA Builds Tax-Free Wealth
The Roth IRA is one of the most powerful retirement savings tools available because of its unique tax treatment: you contribute after-tax dollars today, and every dollar of growth is completely tax-free in retirement. No RMDs, no future tax bill — just tax-free compounding for decades.
The Power of Tax-Free Compounding
With a Roth IRA, you pay taxes on your contributions now (at your current rate), then every dollar of growth is permanently tax-free. A 30-year-old who maxes out a Roth IRA ($7,000/year) earning 7% will have about $950,000 at age 65 — and pay $0 in taxes on withdrawals. With a Traditional IRA, that same $950,000 would be subject to income tax on every dollar withdrawn. The Roth advantage grows with longer time horizons and higher returns.
Contribution Limits and Eligibility
For 2025, the Roth IRA contribution limit is $7,000 (or $8,000 if age 50+, including the $1,000 catch-up contribution). However, your ability to contribute phases out at higher incomes: single filers with modified AGI above $150,000 and married filing jointly above $236,000 cannot contribute directly to a Roth IRA. High earners can use a Backdoor Roth IRA — contributing to a Traditional IRA then converting to Roth, though the pro-rata rule applies if you have existing pre-tax IRA balances.
Roth vs. Traditional: The Tax Rate Decision
The Roth vs. Traditional decision comes down to your tax rate now vs. in retirement. Roth wins if you expect to be in a higher bracket in retirement — or if you want tax diversification. Traditional wins if you're in a high bracket now and expect to be in a lower one later. Many experts recommend having both: contribute to a Traditional 401(k) for the upfront tax break, and max out a Roth IRA for tax-free growth and flexibility.
The 5-Year Rule
To withdraw Roth IRA earnings tax-free, you must meet the 5-year rule: your first Roth IRA contribution must have been made at least 5 years before the withdrawal, AND you must be at least age 59½, disabled, using the $10,000 first-time home exception, or deceased. Contributions can be withdrawn at any time for any reason, tax-free and penalty-free — no 5-year rule applies to contributions.
Frequently Asked Questions
The 2025 Roth IRA limit is $7,000 ($8,000 if age 50+, including $1,000 catch-up). Income phase-out: single filers with MAGI above $150,000 and joint filers above $236,000 cannot contribute directly. Unlike Traditional IRAs, Roth contributions are never tax-deductible — but qualified withdrawals are 100% tax-free.
Yes! Having both is actually the recommended approach for most people. The optimal strategy: (1) Contribute to your 401(k) up to the employer match, (2) Max out a Roth IRA ($7,000/year) for tax-free growth and investment flexibility, (3) Return to your 401(k) for additional savings. This gives you tax diversification and access to both pre-tax and tax-free money in retirement.
Yes — Roth IRA contributions (not earnings) can be withdrawn at any time, for any reason, completely tax-free and penalty-free. This makes a Roth IRA an excellent emergency fund backup. Earnings withdrawals before age 59½ and before the 5-year rule are subject to income tax and a 10% penalty, with exceptions for first-time home ($10,000), disability, higher education, and birth/adoption expenses.
Roth IRAs are excellent estate planning tools because they have no RMDs during your lifetime. Upon death, the account passes to your beneficiaries. Spousal beneficiaries can treat it as their own Roth IRA. Non-spouse beneficiaries must empty the account within 10 years (SECURE Act 2.0), but all withdrawals remain tax-free for inherited Roth IRAs that are at least 5 years old.
The Backdoor Roth IRA allows high earners to contribute to a Roth IRA indirectly: (1) contribute the maximum to a Traditional IRA (no income limit for contributions, but may not be deductible), (2) convert those funds to a Roth IRA (pay income tax on any pre-tax portion). The pro-rata rule applies if you have other pre-tax IRA balances. The Backdoor Roth is a legal strategy, though its future is subject to congressional debate.
Neither is universally better — it depends on your tax situation. Roth IRA wins if: you expect higher taxes in retirement, want no RMDs, or want the flexibility to withdraw contributions early. Traditional IRA wins if: you need the upfront tax deduction (especially good if you're in a high bracket now), expect lower taxes in retirement, or your income is too high for Roth eligibility. Many people choose Roth for its long-term tax-free benefits.