Roth IRA Calculator

A traditional IRA deducts the contribution now and taxes the withdrawal later. A Roth does the opposite: no deduction now, nothing taxed later. If your tax rate were identical in both periods the two would produce the same after-tax result — the entire question is whether your rate in retirement will be higher or lower than it is today.

Roth generally wins for people early in their careers, in low brackets, or expecting substantial taxable income in retirement. Traditional generally wins for high earners in peak years who expect a lower bracket later. Most people should hold some of each, because nobody knows what rates will be in thirty years.

The IRA contribution limit is a combined ceiling across traditional and Roth accounts, not per account, with an additional catch-up amount from age 50. Contributions for a tax year can be made until that year's filing deadline the following April, which is a useful piece of flexibility.

Roth contributions phase out above income thresholds that depend on filing status. Above the ceiling, the backdoor Roth — a non-deductible traditional contribution converted to Roth — remains available, but the pro-rata rule means any existing pre-tax IRA balance makes the conversion partly taxable. Check the IRS figures for the current year before contributing.

There are two, and they are frequently confused. Contributions can always be withdrawn tax-free and penalty-free at any time, because they were made with after-tax money. Earnings can be withdrawn tax-free only once the account has been open five years and you are 59½ or meet another qualifying exception.

Separately, each Roth conversion has its own five-year clock for penalty-free access to the converted amount. Convert at 57 and withdraw at 60 and you are past 59½ but not past that conversion's clock.

Traditional IRAs and 401(k)s force withdrawals from your seventies onward whether you need the money or not, and those withdrawals are taxable income that can push you into a higher bracket and increase the taxable portion of Social Security.

A Roth IRA has no RMDs during the owner's lifetime. That makes it the most flexible retirement account available and the best one to leave untouched — as a late-life reserve, as a source of tax-free income to manage bracket thresholds, or as an inheritance, since heirs receive the money tax-free even though they must empty the account within ten years.

For most households the sequence is: contribute to the 401(k) up to the full employer match, clear high-interest debt, fund an HSA if eligible, then fill an IRA, then return to the 401(k) up to its limit, then invest in a taxable account.

The match comes first because it is an immediate 50–100% return. The HSA sits high because it is the only triple-tax-advantaged account in the US system — deductible going in, untaxed growth, and tax-free withdrawals for qualified medical expenses.