Roth IRA Growth Calculator
The Roth trade-off
You contribute money you have already paid tax on, and qualified withdrawals in retirement are generally tax-free — including all the growth.
That is the opposite of a traditional account, which gives you the deduction now and taxes the withdrawal later. The question is simply whether your tax rate is higher now or in retirement.
Who it tends to suit
- Early-career earners, whose current bracket is likely lower than their future one
- Anyone expecting higher rates later, whether through income growth or policy change
- People who want flexibility — Roth contributions, though not earnings, can generally be withdrawn at any time without tax or penalty
- Those planning to leave money to heirs, since there are no required minimum distributions during the original owner's lifetime
Income limits
Eligibility to contribute directly phases out above certain income thresholds, which are adjusted annually and depend on filing status. Above the limit, direct contributions are not permitted.
The five-year rule
For earnings to come out tax-free, the account generally must have been open five years and you must be over 59½. The five-year clock starts with your first contribution to any Roth IRA, not with each individual contribution — which is an argument for opening one early even with a small amount, simply to start the clock.
Contributions versus earnings
These are treated differently on withdrawal. The amount you put in has already been taxed and is generally accessible. The growth has conditions attached.
Limits and thresholds change, so confirm current figures at IRS.gov. This is general information, not personalised tax advice.