Roth IRA calculator

How to use this calculator

Our Roth IRA calculator demonstrates the benefits of higher after-tax compound growth within a Roth IRA when compared to investing into a taxable brokerage account. In a taxable brokerage account, investment income and realized capital gains will be taxable each year. In a Roth IRA, all growth and income is typically tax-free unless you make early withdrawals. 

A number of factors impact the relative benefit of the Roth IRA, including how long you plan to invest, how high your marginal tax bracket is, and your expected growth rate. This calculator offers an estimate for your future account balances but does not replace more detailed and personalized financial planning tools. 

 

Factors that affect Roth IRA contributions

Earned income is the most important factor in determining whether you are eligible to make a Roth IRA contribution. Roth contributions may only be made up to the lesser of the individual’s earned household income, or the contribution limit for their age. If someone doesn’t have earned income, they cannot contribute. 

Roth IRA contribution limits for 2026 are:

• $7,500 for individuals under 50 years of age
• $8,600 for individuals age 50 or older

Income is a limiting factor for contributions, with single filers earning less than $153,000 and joint filers earning less than $242,000 able to make a full contribution. Households earning over $168,000 (single) and $252,000 (joint) will be ineligible for contributions. For those with earnings between those amounts, the contribution will be phased out according to income. 

Individuals earning too much to contribute directly may explore a Backdoor Roth contribution strategy, but it should be done carefully and in consultation with a financial or tax advisor. 

Roth IRA Formula

This calculator uses a standard future value calculation formula to determine both the Roth IRA and the taxable brokerage values. Contributions are assumed to be made at the end of each compounding period. These results are not adjusted for inflation. 

FV = (PV(1+i)^n) +  E (Pmt((1+i)^n))

• FV = Future value
• PV = Starting balance
• i = Rate of return
• n = Number of years until age of retirement
• E = Sum
• Pmt = Annual contribution

The taxable brokerage growth rate is calculated by reducing the rate of return input by the marginal tax rate.  

Taxable brokerage account return = i * (1 – marginal tax rate)

Example: A 10% rate of return for the Roth would be 7.5% for the taxable brokerage account when a 25% marginal tax rate is entered. 

The actual impact of taxes on the growth of an investment within a taxable brokerage account will be based on the amount and type of investment income as well as the total realized capital gains within a given tax year. This income and gains will be applied to the marginal tax rate at the time income taxes are filed.

Understanding your results

The results from this calculator offer insight into the benefits of tax-deferred and tax-free retirement accounts. The higher your marginal and effective tax rates, the more beneficial the Roth IRA will be when compared to a taxable brokerage account. However, contributions and growth within a Roth IRA will be less accessible than investments made in a taxable brokerage account. Investors should balance the superior growth benefits of the retirement account with their specific needs for flexibility and accessibility of their money. 

Roth contributions are able to be withdrawn without penalty or taxes at any time for any reason. However, the growth of those contributions will be restricted to after age 59.5 and after the account has been open for five years. Exceptions exist for death, disability or a first time home purchase. All other reasons would trigger taxes and penalties.

Learn more: What is a Roth IRA? How they work, contribution limits and who can open one

How should I balance Roth IRA contributions with other retirement accounts?

Roth IRAs are typically supplementary retirement accounts, and should come second to an employer-sponsored retirement plan, especially if the plan offers a company match. No contributions should be made to an IRA or brokerage account if the full company match has not already been earned. 

Most large company-sponsored retirement plans offer investments with fees equivalent to or less than the fund options available in IRA or brokerage accounts. If this is not the case then there may be a benefit to prioritizing a Roth IRA contribution over further contributions to an employer plan. 

Another reason to prioritize investment into a Roth IRA over an employer retirement plan is a broader set of investment options. Individual stocks, bonds, ETFs and alternative investments are more readily available in an IRA, while employer plans will offer a more limited and curated set of investment options. 

The choice between a Traditional and Roth IRA will depend on your income and tax situation now and in the future. Traditional IRAs will be more beneficial for individuals who expect their current tax rate to be higher than their future retirement tax rate. Investors who are in their prime earning years may find more value in the tax deduction (if eligible) today, while those who expect their future tax rates to be higher will get more value from a Roth IRA. 

There is no wrong way to save and the most important part of investing is putting your money to work, regardless of which type of account you choose. 

Next steps for managing your Roth IRA

Roth IRAs are an excellent way to save for retirement, but they are not a necessity. For investors who are starting out, the most important consideration is your willingness and ability to manage the investments within the IRA. Contributions to an IRA are just the first step, and the growth of the money will depend on what investments you choose, how you rebalance it and how long it grows. 

Self-directed investors should decide whether they have the will, skill and time to appropriately self-manage their account. If you lack one or more of these requirements, choosing an investment option or management solution that takes that responsibility off your shoulders could be worthwhile. 

Any contributions made to a Roth IRA should be done without the expectation that it will be withdrawn prior to retirement. If you aren’t sure whether you will need that money prior to retirement, or if you do not yet have an emergency fund, it will be safer to place that money into a savings account or a brokerage account for better future accessibility.