Roth IRA Calculator
Calculate your Roth IRA growth and see how tax-free compounding builds wealth for retirement.
💰Roth IRA Details
2026 limit: $7,000 (under 50) | $8,000 (50+)
Total Contributed
$301K
Tax-Free Growth
$2.47M
💰 Estimated Tax Savings
$543K
You pay $0 in taxes when you withdraw this in retirement!
Contributions vs Growth
Roth IRA Growth Over Time
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How the Roth IRA Calculator Works
What a Roth IRA Is and Why It's Different
A Roth IRA is a US retirement account with a unique tax structure: you contribute money that has already been taxed, but all future growth and withdrawals in retirement are completely tax-free. This is the opposite of a Traditional IRA or 401(k), where you get a tax deduction on contributions but pay taxes on withdrawals.
The Roth's tax-free growth is powerful because investment returns compound without any annual tax drag. In a taxable brokerage account, you'd owe capital gains tax when you sell and dividend tax each year. In a Roth IRA, none of that applies — dividends, capital gains, and interest all accumulate tax-free for decades.
Roth IRAs also have no Required Minimum Distributions (RMDs) during the owner's lifetime, unlike Traditional IRAs and 401(k)s. This makes them exceptional for estate planning and for retirees who want to leave tax-free wealth to heirs.
The Contribution Limits and Income Rules
For 2026, the Roth IRA contribution limit is $7,000 per year for those under 50, and $8,000 for those 50 and older (catch-up contribution). You must have earned income at least equal to your contribution — investment income and passive income don't count.
There are also income limits. For 2026, single filers can contribute fully if their Modified Adjusted Gross Income (MAGI) is under $161,000, with phase-outs to $176,000. Married filing jointly can contribute fully under $240,000, phasing out to $250,000. Above these limits, you cannot contribute directly — but the Backdoor Roth strategy allows high earners to still fund a Roth IRA.
Unlike a 401(k), Roth IRAs are self-directed — you open them at a brokerage (Fidelity, Vanguard, Schwab) and choose your own investments. This gives you access to a much wider range of funds, ETFs, and stocks than the typical 401(k) menu.
The Most Powerful Roth Feature: Contribution Flexibility
One of the least-understood features of a Roth IRA is that you can withdraw your contributions (not earnings) at any time, tax-free and penalty-free. Since you already paid tax on that money going in, the IRS lets you take it back out without additional penalty.
This makes the Roth IRA more flexible than a 401(k). You can use it as a backup emergency fund (in addition to a regular emergency fund), or to bridge expenses during a career break or early retirement. Earnings on contributions are different — those are subject to a 5-year rule and 59½ age requirement.
The 5-year rule for tax-free earnings: each Roth conversion has its own 5-year clock for penalty-free access to earnings. For direct contributions, the account itself must have been open 5 years for earnings to be tax-free. This is why opening a Roth IRA early — even with a small amount — is valuable.
Step-by-Step Worked Example
Meet Alex, who is 25 years old and contributes the full $7,000 annually to a Roth IRA until age 65 (40 years). Assume 9% annual returns and no starting balance.
- 1Years of contribution: 40.
- 2Total contributed: $7,000 × 40 = $280,000.
- 3Annual return: 9%.
- 4Future value of $7,000/year annuity at 9% for 40 years:
- 5FV = $7,000 × [((1.09)^40 − 1) / 0.09] = $7,000 × 337.88 = $2,365,000.
- 6From age 50, contribution could increase to $8,000, adding slightly to the total.
Result
Total contributions: $280,000
Total tax-free growth: $2,085,000
Final Roth IRA balance at age 65: $2,365,000
Taxes owed at withdrawal: $0
If this were a taxable brokerage account: ~$450,000 in capital gains tax over 40 years (at 22% rate)
Net Roth advantage: approximately $450,000 in tax savings
Key Benefits & Use Cases
When to Use This Tool
- ✓Building tax-free retirement wealth for people with earned income.
- ✓Hedging against future tax rate increases — Roth withdrawals are tax-free regardless of future tax law.
- ✓Estate planning — Roth IRAs pass to heirs tax-free and have no RMDs during the owner's lifetime.
- ✓Backup emergency fund for those who've maxed their regular emergency fund.
- ✓Diversifying tax exposure alongside a 401(k) or Traditional IRA.
Why It Matters
- →All growth is completely tax-free — no capital gains tax, no dividend tax.
- →Withdrawals in retirement are tax-free — perfect for managing tax brackets.
- →No Required Minimum Distributions (RMDs) during the owner's lifetime.
- →Contributions can be withdrawn any time, tax-free and penalty-free (flexibility).
- →Great for estate planning — heirs inherit tax-free.
- →Wide range of investment options (stocks, ETFs, bonds, funds).
Who Should Use This Calculator
- ★Young professionals expecting higher tax rates in retirement.
- ★Anyone who has maxed out their 401(k) employer match and wants additional tax-advantaged savings.
- ★High earners using the Backdoor Roth strategy.
- ★Investors seeking tax diversification across Traditional and Roth accounts.
Tax-Free Growth
All growth in a Roth IRA is 100% tax-free when you withdraw in retirement.
Compound Power
See how even small annual contributions compound into massive wealth.
Tax Savings
Calculate how much you save by not paying taxes on investment gains.
How to Use
Enter Age
Set your current age and target retirement age.
Set Contribution
Enter your annual Roth IRA contribution (max $7,000).
Add Balance
Include your current Roth IRA balance.
View Projection
See tax-free retirement wealth and growth chart.
The Formula
FV = PV(1+r)^n + C × [((1+r)^n - 1) / r]Frequently Asked Questions
What is a Roth IRA?
A Roth IRA is a retirement account where you contribute after-tax money, but all growth and withdrawals in retirement are completely tax-free. It's one of the best wealth-building tools in the US, especially for young investors with decades of compounding ahead.
What is the 2026 Roth IRA contribution limit?
The 2026 limit is $7,000 per year for those under 50, and $8,000 for those 50 or older (catch-up contribution). You need earned income at least equal to your contribution.
What is the Roth IRA income limit?
For 2026, single filers must earn under $161,000 (MAGI) for full contribution, phasing out to $176,000. Married filing jointly under $240,000, phasing out to $250,000. Above these limits, use a 'Backdoor Roth IRA' strategy.
Roth IRA vs Traditional IRA — which is better?
Roth IRA is better if you expect to be in a higher tax bracket in retirement. Traditional IRA gives a tax deduction now. If you're young with decades of growth ahead, Roth IRA usually wins. Many experts recommend a mix of both for tax diversification.
Can I withdraw from Roth IRA early?
You can withdraw your contributions (not gains) at any time, tax-free and penalty-free, since you already paid tax on them. Gains can be withdrawn tax-free after age 59½ and 5 years of account age. Withdrawals before 59½ of gains trigger 10% penalty + income tax.
Should I max out my Roth IRA?
Yes! Maxing out your Roth IRA at $7,000/year from age 25 to 65 at 9% return gives you over $2.3 million in tax-free retirement wealth. The earlier you start, the more compounding works in your favour.
Can I have both a Roth IRA and a 401(k)?
Yes — the limits are separate. You can contribute $23,500 to a 401(k) AND $7,000 to a Roth IRA in 2026. This lets you save $30,500/year in tax-advantaged accounts. Many experts recommend maxing the 401(k) match first, then the Roth IRA, then returning to the 401(k).
What is a Backdoor Roth IRA?
If your income exceeds the Roth IRA limits, you can contribute to a non-deductible Traditional IRA, then convert it to a Roth IRA. This has been legal since 2010 and is widely used by high earners. Watch out for the pro-rata rule if you have existing pre-tax Traditional IRA balances.
Do Roth IRAs have required minimum distributions?
No — Roth IRAs have NO Required Minimum Distributions during the owner's lifetime, unlike Traditional IRAs and 401(k)s. This makes them exceptional for estate planning, as the entire balance can continue to grow tax-free for heirs.
Reviewed by AutoWealthLab Editorial Team
This calculator and its accompanying guide are maintained by the AutoWealthLab editorial team. Every formula is verified against standard financial references, and results are cross-checked with independent calculators before publishing. Our tools are updated whenever tax rules, interest rate benchmarks, or regulatory formulas change.
Last reviewed: October 2026 · Methodology: Standard amortization and compound interest models · Learn more about our testing process