Roth IRA Calculator
2026 IRA limit: check the current IRS figure
≈7% for a broad equity index fund, historically
Capital gains + dividends you'd pay along the way outside the Roth
Roth IRA balance in 30 years
$711,646
Tax-free — every dollar of it, forever
Tax shield worth $131,255
The same money in a taxable account ends at $580,391, compounding at 5.95% instead of 7%.
Roth versus taxable, year by year
| Year | Contributed | Taxable account | Roth IRA | Roth advantage |
|---|---|---|---|---|
| Year 1 | $7,000 | $7,194 | $7,229 | $35 |
| Year 2 | $14,000 | $14,828 | $14,981 | $153 |
| Year 3 | $21,000 | $22,929 | $23,292 | $364 |
| Year 4 | $28,000 | $31,525 | $32,205 | $680 |
| Year 5 | $35,000 | $40,647 | $41,762 | $1,116 |
| Year 6 | $42,000 | $50,326 | $52,010 | $1,684 |
$7,000 annual contributions at 7%, taxable gains taxed at 15% along the way.
Same money, same investments — two tax treatments. This calculator runs your contributions through a Roth IRA and a taxable account side by side, and shows the gap in dollars. Spoiler: the gap starts small and grows like a hockey stick.
A Roth IRA is funded with money you have already paid tax on. In exchange, everything the account earns — dividends, interest, capital gains — compounds untaxed forever, and qualified withdrawals in retirement are tax-free too. The calculator's comparison is deliberately narrow: it holds the investments constant and changes only the tax treatment, because that is the decision you actually face.
Roth: FV at r | Taxable: FV at r × (1 − t)- r
- annual return before tax
- t
- tax rate applied to gains in the taxable account each year
- FV
- future value of the same contribution stream
Worked example: $7,000 a year for 30 years at 7%
Invest $7,000 annually for 30 years at 7% and the Roth balance reaches roughly $709,000. Run the same stream through a taxable account where gains are taxed at 15% along the way — an effective compounding rate of 5.95% — and it reaches about $611,000. The $98,000 difference is pure tax geometry: same deposits, same fund, different wrapper.
| Years | Contributed | Taxable account | Roth IRA | Roth advantage |
|---|---|---|---|---|
| 10 | $77,000 | $110,100 | $112,300 | ≈$2,200 |
| 20 | $147,000 | $309,600 | $329,600 | ≈$20,000 |
| 30 | $217,000 | $611,000 | $709,000 | ≈$98,000 |
Balances rounded; the advantage accelerates because tax drag compounds too.
Why the gap widens like a hockey stick
In the early years most of the account is principal, so there is little gain to tax and the two wrappers track closely — look at year 10. As compounding takes over, the taxable account pays tax on an ever-larger base every year, while the Roth never does. The advantage in year 30 is roughly forty-five times the advantage in year 10. This is why retirement-account decisions made in your twenties matter far more than they appear to at the time.
The hidden flexibility: contributions are withdrawable
Because Roth contributions are after-tax, you can withdraw them anytime, tax- and penalty-free — only earnings carry restrictions before 59½. That makes the Roth a strange hybrid: a retirement account that doubles as a last-resort emergency layer. Don't raid it — early withdrawals forfeit decades of compounding. But knowing the money is reachable makes it much easier to commit in your twenties, when committing matters most.
| Feature | Roth IRA | Traditional IRA/401(k) |
|---|---|---|
| Tax on contribution | After-tax | Pre-tax (deductible, subject to rules) |
| Tax on growth | None | Deferred to withdrawal |
| Tax on qualified withdrawal | None | Ordinary income |
| Required minimum distributions | None (owner) | Yes, from age 73 |
| Early access to contributions | Anytime, tax/penalty-free | Tax + 10% penalty, with exceptions |
Common Roth mistakes
- Assuming the Roth is automatically better — if your tax rate drops sharply in retirement, the traditional deduction can win; the honest answer depends on rates on both ends
- Exceeding the income phase-out without doing a backdoor conversion — excess contributions owe a 6% annual penalty until corrected
- Withdrawing earnings before 59½ without a qualifying exception — tax plus a 10% penalty applies
- Leaving the Roth in cash after funding it — the wrapper is not the investment; the money needs to actually be invested
Sources & review
Reviewed by The Numberridge Editorial Team
Fact-checked · methodology documented
Every formula on this page is checked against the primary source documentation listed below before publication.
Last updated October 2026
Frequently asked questions
What is a Roth IRA?
A retirement account funded with after-tax money. Contributions grow tax-free and qualified withdrawals in retirement — including all the earnings — are tax-free too. The trade is paying tax today for certainty later.
How much can I contribute to a Roth IRA?
The annual limit adjusts for inflation (with an extra catch-up allowance from age 50), and eligibility phases out above certain income levels. Check the current IRS figures — linked in our sources — before maxing out. This calculator doesn't enforce limits — payroll wins any disagreement.
Why is Roth growth worth more than a taxable account?
In a taxable account, dividends and realized gains are taxed along the way, so the compounding rate is effectively r × (1 − tax rate). Roth balances compound at the full rate. Over decades the gap becomes one of the largest single contributors to ending wealth.
Roth IRA or 401(k) — which first?
The common order: capture the full 401(k) match first (free money beats tax geometry), then fill a Roth IRA, then return to the 401(k) toward its limit. The Roth's flexibility — contributions (not earnings) can be withdrawn anytime without penalty — makes it a strong second stop.
Can I withdraw from a Roth IRA early?
Contributions can be withdrawn anytime, tax- and penalty-free, because tax was already paid. Earnings withdrawn before 59½ generally incur tax and a 10% penalty unless an exception applies. That flexibility is why the Roth doubles as a last-resort emergency layer.
What return should I assume?
Match it to your actual portfolio: a broad equity index fund has historically returned around 7% nominal over long periods; a balanced fund closer to 5%–6%. The comparison against a taxable account holds at any rate — the tax drag is proportional.
Does the backdoor Roth still work?
High earners above the income phase-out can fund a Roth indirectly via a non-deductible traditional IRA contribution followed by conversion — the 'backdoor.' The pro-rata rule taxes conversions proportionally to any pre-tax IRA money you hold, so existing balances matter. Rules evolve; verify current law before executing.
Are Roth withdrawals taxed in retirement?
Qualified withdrawals are entirely tax-free, which is why Roth assets do not raise your taxable income or Medicare premiums in retirement. For planners, that predictability is part of the value: Roth balances are worth slightly more than their face value against future tax uncertainty.
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