What a Roth IRA actually gives you
A Roth IRA is a retirement account you fund with money that has already been taxed. Nothing is deducted from this year's tax bill, and in exchange nothing is ever taxed again — not the growth while it sits there, not the withdrawals once you retire.
It was created by the Taxpayer Relief Act of 1997 and named after Senator William Roth. The mechanics are simple enough, but the effect over decades is not obvious until you see it next to the alternative, which is what this calculator does: the same contributions, the same returns, one account sheltered and one not.
Three features matter more than people expect. Contributions can be withdrawn at any time without tax or penalty, so the account doubles as a reserve. There are no required minimum distributions while you are alive. And heirs inherit the balance without an income tax bill attached.
The arithmetic, and where the gap comes from
Both accounts in the comparison get the same treatment each year: the balance grows, then the year's contribution goes in.
The taxable account is charged on its growth as that growth happens, so what actually compounds is the after-tax return:
That reduces the effective rate to return × (1 − tax rate). A 7% return at a 24% marginal rate is really 5.32%. It sounds like a small difference and it is not, because the shortfall is not a one-off deduction — every dollar of tax paid in year three is also a dollar that never earns anything in years four through thirty.
This is the whole story of the two lines pulling apart on the chart. They start together, stay close for a decade, and then diverge sharply, because compounding rewards the larger base and the taxable account's base is falling behind a little more every year.
Contribution limits, and who can use one
For 2026 the annual limit is $7,500 if you are 49 or under and $8,600 from age 50, the difference being the catch-up allowance. Two things about that number catch people out: it is a combined limit across all your IRAs rather than one per account, and you cannot contribute more than you earned in the year.
There are also income limits. Direct contributions phase out above roughly $168,000 of modified adjusted gross income for a single filer and $246,000 for a couple filing jointly, and disappear entirely above the top of those ranges. Higher earners commonly use the backdoor route instead, contributing to a traditional IRA and converting, which has no income cap but does need care where other pre-tax IRA money exists.
If you type a contribution above the limit, the calculator reduces it and says so rather than quietly using a smaller number.
Roth or traditional?
The honest answer is that it depends on one thing you cannot know: whether your tax rate in retirement will be higher or lower than it is now.
- Traditional IRA deducts the contribution now and taxes the withdrawal later. Better if your rate falls — a high earner today who expects a modest retirement income.
- Roth IRA taxes the contribution now and never again. Better if your rate stays the same or rises — which describes most people early in a career, and anyone who thinks rates in general are heading up.
When the two rates are identical the maths comes out even, and the decision falls to the extras. Those favour the Roth: no forced withdrawals at 73, contributions accessible if life goes wrong, and a cleaner inheritance. Plenty of people hold both, which also hedges the rate question rather than betting on it.
What to put in each field
- Current balance. What the Roth is worth today. Zero is fine if you have not opened one.
- Contribute the maximum. Choose Yes and the calculator uses the IRS limit each year, stepping up automatically when you reach 50.
- Annual contribution. What you realistically expect to add each year. Anything above the limit is reduced to it.
- Expected rate of return. The long-run average for a broad stock index has been near 10% a year before inflation, but a mixed portfolio and a cautious assumption usually mean something in the 5% to 7% range. This single field moves the answer more than any other.
- Marginal tax rate. The rate on your next dollar of income. It changes only the taxable comparison, never the Roth.
Getting the money out
Contributions and earnings follow different rules, and mixing them up is the most common Roth mistake.
Your contributions can be withdrawn whenever you like, at any age, tax-free and penalty-free. They were taxed before they went in, so the IRS has no further claim. Withdrawals come out of contributions first, which is what makes this workable in practice.
Earnings are stricter. To take them out tax-free the account generally has to have been open five years and you have to be 59½ or older. The exceptions are narrow: a first home up to a $10,000 lifetime cap, qualified education expenses, disability, unreimbursed medical costs above a threshold, health insurance while unemployed, or payment to a beneficiary after death.
The five-year clock starts on January 1 of the tax year of your first contribution, and it runs once for all your Roth IRAs. Converted amounts each start their own five-year clock, which is worth knowing before a backdoor conversion.
What this calculator does not model
- A steady return. Markets do not deliver the same percentage every year, and the order of good and bad years changes the outcome even when the average is identical.
- Inflation. Every figure is in today's dollars only in the sense that nothing is adjusted. A balance decades away buys less than the same number does now.
- Rising contribution limits. The IRS indexes them, so a real saver will be able to put in more over time than this projection assumes.
- Income limits. The calculator will happily project contributions you may not be eligible to make.
- The taxable comparison is simplified. It charges tax on all growth every year at your marginal rate. Real taxable investing mixes annually taxed dividends with capital gains deferred until sale and often taxed at lower long-term rates, so the true drag is usually somewhat smaller than shown.
- Fees. Fund expense ratios and advisory charges come off the return before anything else, and a percentage point of fee compounds against you exactly the way returns compound for you.
Frequently asked questions
How much will my Roth IRA grow?
It depends on three things: what is in there now, what you add each year, and what the investments return. Nothing is taxed along the way, so the whole balance compounds. Putting $6,000 a year into an account already holding $24,000, at a 7% return from age 34 to 65, gets you to roughly $808,000 — of which about $598,000 is growth rather than money you put in. Change the return to 5% and the same contributions reach about $533,000, which is how much the assumed rate matters over three decades.
What is the Roth IRA contribution limit for 2026?
$7,500 if you are 49 or younger, and $8,600 from age 50, the extra being the catch-up allowance. That is a combined limit across all your IRAs, traditional and Roth together, not a separate allowance for each. You also cannot contribute more than you earned that year, and contributions for a tax year can be made right up to the filing deadline the following April.
Is a Roth IRA better than a taxable brokerage account?
For money you intend to leave invested until retirement, almost always. A taxable account is charged tax on its growth as it goes, so it compounds on a smaller base every year, and that drag widens over time. A 7% return taxed at 24% is really 5.32%. The calculator above shows both balances side by side so you can see the gap for your own numbers. The trade-off is access: a brokerage account has no rules about when you take the money out.
Should I choose a Roth IRA or a traditional IRA?
It comes down to whether your tax rate is higher now or in retirement. A traditional IRA deducts the contribution today and taxes the withdrawal later, so it suits someone in a high bracket now who expects a lower one later. A Roth does the reverse and wins if your rate later is the same or higher — which is the common case for younger savers early in a career. When the two rates are identical the maths is a tie, and the tie-breakers favour the Roth: no required withdrawals, and heirs inherit it tax-free.
What are the Roth IRA income limits?
For 2026, the ability to contribute directly starts phasing out above about $168,000 of modified adjusted gross income for a single filer or head of household, and about $246,000 for a married couple filing jointly. Above the top of those ranges you cannot contribute directly at all. Higher earners often use a backdoor Roth instead — contributing to a traditional IRA and converting — which has no income limit but does have tax consequences worth checking first.
Can I withdraw money from a Roth IRA before retirement?
Your own contributions can come out at any age, at any time, with no tax and no penalty, because they were made with money that had already been taxed. Earnings are the strict part: to take those out tax-free you generally need the account to have been open five years and to be at least 59½, with exceptions for a first home up to a $10,000 lifetime limit, qualified education costs, disability, and a few others. This flexibility on contributions is why a Roth doubles as a decent emergency reserve.
Do Roth IRAs have required minimum distributions?
No, not during the original owner's lifetime, and that is one of the sharpest differences from a traditional IRA or 401(k), which force withdrawals from age 73. Since 2024 the same exemption applies to Roth 401(k) accounts. Money can be left to compound untouched for as long as you like, which makes a Roth unusually useful for anyone who does not need the money and wants to pass it on. Inherited Roth accounts are a separate matter and beneficiaries generally do face a ten-year deadline.
How does the marginal tax rate field affect the result?
It only affects the taxable account, never the Roth. The comparison assumes the taxable account is charged at your marginal rate on its growth each year, so raising the rate lowers that balance and widens the Roth advantage. It is a deliberately simple model: real taxable investing mixes dividends taxed annually with capital gains taxed only when you sell, often at lower long-term rates, so treat the taxable column as a reasonable upper bound on the tax drag rather than an exact figure.
This is an educational projection, not financial, tax or investment advice. It assumes a constant rate of return, contributions made every year without fail, and no fees, and it does not check whether your income allows you to contribute at all. Contribution limits are the IRS figures for 2026 and are indexed upward over time. Real markets do not return the same percentage each year. Confirm the current limits at IRS.gov and speak to a tax professional about your own position. More about how we build and check these tools is on our About page, and our Privacy Policy explains what we do and do not collect — nothing you type here leaves your browser.