What is a Roth IRA Calculator?
A Roth IRA calculator projects the tax-free retirement wealth you can accumulate through annual after-tax contributions to a Roth IRA. Unlike traditional IRAs, Roth IRA contributions are made with after-tax money — but all qualified withdrawals in retirement are completely tax-free, including decades of investment gains.
Roth IRA 2025 Key Rules
Contribution limit: $7,000/year ($8,000 if age 50+) · Income phaseout (single): $150,000–$165,000 MAGI
Income phaseout (MFJ): $236,000–$246,000 MAGI · No RMDs during owner's lifetime · 5-year rule applies
- The biggest advantage: A $7,000 Roth contribution at age 25 growing at 8% becomes ~$218,000 by age 65 — completely tax-free. At a 22% tax rate, that's equivalent to $279,000 in a taxable account.
- Roth vs Traditional IRA: Choose Roth if you expect to be in a higher tax bracket in retirement than now. Choose Traditional if you need the current-year deduction or expect lower taxes in retirement.
- Backdoor Roth: High earners above the income limit can contribute to a non-deductible traditional IRA and immediately convert to Roth (the "backdoor Roth"). This strategy requires careful execution to avoid the pro-rata rule.
What is the 5-year rule for Roth IRA withdrawals?
To withdraw Roth IRA earnings tax-free, two conditions must be met: (1) You must be at least 59½. (2) The account must have been open for at least 5 tax years (the 5-year holding period). If you opened your first Roth IRA at 58 and retire at 62, you must wait until 63 before earnings withdrawals are fully tax-free. Roth contributions (not earnings) can always be withdrawn tax-free and penalty-free at any time.
Can I contribute to both a 401(k) and a Roth IRA?
Yes — if your income is below the Roth IRA phaseout limits. The $7,000 IRA limit is separate from the $23,500 401(k) limit. The optimal strategy for many workers: contribute to 401(k) up to the employer match, then max out Roth IRA ($7,000), then contribute more to 401(k) if additional savings capacity remains. This gives you both the employer match and the tax diversification benefit of having both pre-tax (401k) and post-tax (Roth) retirement accounts.
What happens to my Roth IRA if I exceed the income limit?
Contributing to a Roth IRA when above the income limit results in an excess contribution, which carries a 6% annual penalty on the excess amount until corrected. If you discover you exceeded the income limit, you can remove the excess contribution (plus earnings) by the tax filing deadline (including extensions) without penalty. Alternatively, recharacterise the contribution to a traditional IRA. For those consistently over the income limit, the backdoor Roth strategy is the legal path.
Last Updated: March 2026 · For US audiences