Roth IRA Calculator
Roth IRA Balance at Retirement
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Here’s an explanation of our calculations, plus an extensive rundown of what’s involved in a Roth IRA.
How to use this Roth IRA calculator
- You can calculate how much the money you’ll have in retirement, based on how much you invest in your Roth IRA each year.
- The calculator automatically populates with your estimated maximum annual contribution based on your age, income and tax filing status. You can adjust that contribution down if you plan to contribute less.
- The Roth IRA calculator defaults to a 6% rate of return, which should be adjusted to reflect the expected annual return of your investments.
- The calculator will show you the value of the Roth IRA’s tax-free investment growth by comparing your projected Roth IRA account balance at retirement to the balance you would have if you used a taxable account. We use your income and tax filing status to calculate your marginal tax rate.
What is a Roth IRA?
A Roth IRA is a tax-advantaged individual retirement account. Contributions to a Roth IRA are made after tax, and money grows tax-free. As long as you follow the rules for Roth IRA distributions, you’ll pay no income tax when you take your money out in retirement.
This is in stark contrast to the tax treatment of a traditional IRA and a 401(k); both of those accounts earn you a tax deduction on contributions, but distributions in retirement are taxed as income.
A Roth IRA isn’t itself an investment, but an account through which you can buy investments. Most Roth IRAs will give you access to a large investment selection, including individual stocks, bonds and mutual funds. The investments you select should be based on your risk tolerance and time horizon.
Roth IRA eligibility and contribution limits
The total annual contribution limit for the Roth IRA is currently $6,000, with an additional catch-up contribution of up to $1,000 allowed for people 50 or older. That limit applies to both Roth and traditional IRA accounts; if you have both, you can contribute a total of up to $6,000 ($7,000 if 50 or older).
At certain income levels, the Roth IRA’s maximum annual contribution begins to phase down, and the ability to contribute to a Roth IRA is eliminated completely in 2020 at a modified adjusted gross income of $206,000 for people who are married filing jointly and $139,000 for single filers. Our calculator identifies your maximum contribution for the year based on the age, income and the filing status you provide.
Roth IRA income limits for 2019 and 2020
|Filing status||2019 MAGI||2020 MAGI||Maximum annual contribution|
|Single, head of household or married filing separately (if you didn't live with spouse during year)||Less than $122,000||Less than $124,000||$6,000 ($7,000 if 50 or older)|
|$122,000 up to $137,000||$124,000 up to $139,000||Contribution is reduced|
|$137,000 or more||$139,000 or more||No contribution allowed|
|Married filing jointly or qualifying widow(er)||Less than $193,000||Less than $196,000||$6,000 ($7,000 if 50 or older)|
|$193,000 up to $203,000||$196,000 up to $206,000||Contribution is reduced|
|$203,000 or more||$206,000 or more||No contribution allowed|
|Married filing separately (if you lived with spouse at any time during year)||Less than $10,000||Less than $10,000||Contribution is reduced|
|$10,000 or more||$10,000 or more||No contribution allowed|
Roth IRA distributions
Because they’re made with after-tax dollars, you can pull contributions out of a Roth IRA at any time, without tax or penalty. But investment earnings are a different story — in general, in order to withdraw investment earnings from your Roth IRA, the account must be at least five years old and you must be 59 ½ or older. The five-year clock starts Jan. 1 of the year you made your first contribution.
With a few exceptions, all other withdrawals of earnings may be taxed as income and, in some cases, penalized with an additional 10% tax. Here’s a full rundown of the rules for Roth IRAs.
What if I’m not eligible or my contribution limit is reduced?
If you’re eligible to contribute a reduced amount, we’d recommend taking advantage of that, as even a reduced contribution is valuable. If you’ve done that or you’re not eligible to contribute at all, there are several other tax-advantaged ways to save for retirement.
- If you have a 401(k) or other retirement plan at work: We’d suggest using that as your primary retirement account. You can contribute up to $19,500 per year (with another $6,500 as a catch-up contribution for those 50 or older). Some employers even offer a Roth version of the 401(k) with no income limits. You can also contribute up to $6,000 ($7,000 if you’re 50 or older) to a nondeductible traditional IRA. Why nondeductible? Because the IRS limits the ability to deduct traditional IRA contributions at certain income levels for investors who also have access to a 401(k). But your contributions to a nondeductible traditional IRA will still grow tax-deferred. And if you’d like, you can take advantage of a backdoor Roth IRA: The IRS allows you to convert after-tax money in a traditional IRA into a Roth IRA (if there’s any pre-tax money in your IRA, you’ll likely owe income tax on at least a portion of your conversion). These conversions are not subject to income limitations.
- If you don’t have a retirement plan at work: If you’re single and don’t have a workplace retirement plan, or you’re married and neither you nor your spouse has a 401(k), you can make deductible contributions to a traditional IRA. You’ll get a tax deduction for your contributions, and your money will grow tax-deferred. Distributions will be taxed in retirement. If your spouse has a 401(k) or other workplace plan and you exceed the IRA income limits, you can’t deduct contributions to a traditional IRA. You can contribute after-tax money to the traditional IRA, then use the backdoor Roth IRA mentioned above by converting the traditional IRA into a Roth IRA.
For more, check out our complete guide to Roth IRAs.