Roth IRA Calculator

Introduction

This Roth IRA Calculator compares ending wealth when you contribute after-tax dollars to a Roth IRA versus investing the same out-of-pocket cost in a taxable brokerage account. Enter annual contribution, current marginal tax rate, expected return, and years invested. Roth growth and qualified withdrawals are modeled as tax-free; taxable account growth faces ongoing tax on dividends and capital gains at assumptions built into the tool. Use it when you are deciding whether Roth beats taxable for long horizons, not when comparing Roth to traditional IRA deferral.

Who this calculator is for

Workers who already max employer plans and choose between Roth IRA and taxable investing with the same take-home cost. Young earners in lower brackets who expect higher taxes later use it to quantify tax-free compounding. Parents funding a child's Roth if they have earned income may run scenarios with shorter horizons and smaller amounts.

Traditional versus Roth versus taxable together belongs in the IRA Calculator. Whole retirement adequacy belongs in the Retirement Calculator. Paycheck impact of shifting deferral to Roth 401(k) belongs in the Take-Home Pay Calculator.

What it estimates

Roth path: after-tax contribution compounds at full return; qualified withdrawals avoid tax. Taxable path: you may model that only the after-tax equivalent is invested if contributions would have been pretax elsewhere, or that the same gross dollars are invested then taxed on gains and income along the way. Ending balances are compared after tax on the taxable side at liquidation.

Assumptions on qualified dividend rate, capital gains rate, turnover, and tax-loss harvesting materially change taxable outcomes. The calculator uses stated effective rates unless you customize them. State tax, Net Investment Income Tax, and future law changes are not modeled.

Inputs explained

Use consistent tax rates: marginal rate on contributions for Roth comparison, long-term capital gains rate on taxable gains if the form separates them.

• Annual Roth contribution: After-tax dollars added each year up to IRS limits.
• Marginal tax rate on contributions: Rate you would pay if you kept money taxable instead, often 22% to 24%.
• Expected annual return: Pre-tax investment return before fees.
• Years invested: Time until withdrawal for the comparison.
• Tax rate on taxable gains (if shown): Long-term capital gains and qualified dividend rate in retirement or at sale.
• Starting balance (optional): Existing Roth or taxable balance.

How to read the results

Roth ending balance is spendable if qualified: age 59 and a half, five-year rule, and other IRS rules met. Taxable ending balance may show pretax growth minus estimated tax due at sale. The gap between lines is the value of tax-free compounding plus avoiding annual drag on taxable accounts.

If taxable almost catches Roth, your horizon may be short or assumed taxable tax efficiency is optimistic. Extend years or raise return slightly and Roth advantage usually widens. For traditional IRA deferral tradeoffs, switch to the IRA Calculator.

Worked example

Contribute $7,000 per year to Roth for 25 years at 7% return. Total contributions $175,000. Roth ending balance near $473,000, all qualified withdrawals tax-free. Taxable alternative: invest $7,000 after-tax each year with same return but lose perhaps 15% to 20% of growth annually to taxes on dividends and realized gains depending on assumptions; ending spendable balance might land $380,000 to $420,000.

At 24% marginal rate today, the choice is not Roth $7,000 versus traditional $7,000 pretax; traditional would allow about $9,210 equivalent deferral for same out-of-pocket if deductible. This calculator focuses Roth versus taxable with same after-tax contribution. Pair with IRA Calculator for three-way traditional comparison using $6,500 or current limit examples.

Practical use cases

Backdoor Roth planning: confirm long horizon makes after-tax contribution worthwhile versus taxable if no traditional deduction exists. Early career teacher in 12% bracket: Roth locks low rate. High earner using taxable only because income exceeds Roth limits: quantify cost of taxable drag.

Inheritance planning: Roth balances pass to heirs with favorable rules relative to traditional IRAs subject to RMD. See RMD Calculator for traditional side. Read tax planning strategies 2026 for legislative context.

Limitations and related tools

Does not model Roth conversion ladders, five-year rule per conversion, or penalty on non-qualified earnings. Income limits for direct Roth contributions are not enforced in math; verify eligibility. Traditional IRA deductibility and pro-rata rule on conversions are omitted.

Three-way compare: IRA Calculator. Employer plan: 401(k) Calculator. Retirement total: Retirement Calculator.

How It Works

1. Enter annual Roth contribution. Type after-tax dollars you will add each year within IRS limits.
2. Set tax and return assumptions. Enter marginal rate on contributions and expected investment return.
3. Choose investment horizon. Set years until you expect qualified withdrawals.
4. Compare ending balances. Calculate and read Roth versus taxable after-tax totals. Adjust horizon to see when Roth lead widens.

Formula and methodology

The Roth IRA Calculator uses this identity for the scenario you enter. A bank, payroll system, or tax program may round on a 360-day year or average daily balance, so a statement can differ by a small amount.