Quick answer
An IRA calculator projects retirement savings in an individual retirement account and compares traditional and Roth outcomes after tax. $7,000 a year for 25 years at 7% grows to about $442,743 before tax — worth $389,614 in a traditional IRA withdrawn at 12%, or $345,340 in a Roth funded at a 22% rate today.
How the IRA Calculator works, step by step
Enter your current age, retirement age, current balance, annual contribution, expected return, and your tax rate now and in retirement. The calculator compounds annually, with contributions added at each year-end, and runs both account types on the same gross pot so the comparison is a pure tax comparison rather than two different savings plans.
The comparison is built on equal out-of-pocket cost. A traditional IRA is funded with pre-tax money and taxed at withdrawal; a Roth is funded with after-tax money and never taxed again. Because the gross growth is identical, the Roth wins exactly when your retirement tax rate is higher than today's, the traditional wins when it is lower, and they tie when the rates are equal. That single comparison is the whole decision.
A traditional IRA defers tax: contributions may be deductible now, growth is untaxed along the way, and withdrawals in retirement are taxed as ordinary income. The deduction phases out at higher incomes if you are covered by a workplace plan — for 2026, from $81,000 to $91,000 of modified AGI for single filers and $129,000 to $149,000 for married couples filing jointly. Required minimum distributions apply from age 73 (75 if you were born in 1960 or later).
Two constraints shape real IRA saving. Contributions are capped each year — $7,500 for 2026 across all your IRAs combined, $8,600 at age 50 or older — and you need earned income to contribute. A 401(k) does not consume IRA room: the 2026 elective deferral limit for a 401(k) is $24,500, separate from the IRA limit, and contributions for 2026 can be made until the April 2027 filing deadline.
What the comparison leaves out is flexibility, which is real but hard to price. A Roth lets you withdraw contributions at any time without tax or penalty and has no required distributions for the owner; a traditional IRA gives you the deduction now, which the tool's equal-cost framing already accounts for by funding the Roth with after-tax money only. Tax diversification — holding some of each — is the usual answer when the future rate is genuinely uncertain.
The formula
Gross value = Balance × (1 + r)^t + Annual contribution × [((1 + r)^t − 1) / r]. Traditional after-tax = gross × (1 − retirement rate). Roth after-tax = gross × (1 − today's rate).
Worked example — try it on the calculator above
Worked example: $7,000 a year for 25 years at 7%
Contributing $7,000 a year for 25 years at a 7% return produces a gross pot of about $442,743, from $175,000 of contributions. With a 22% rate today and a 12% rate in retirement, the traditional IRA keeps $389,614 and the Roth keeps $345,340 — the traditional wins by $44,274. Flip the rates (12% now, 22% later) and the Roth wins by the same margin. Add a $50,000 starting balance and the gross pot becomes $714,115, with the same logic deciding the winner.
Frequently Asked Questions
What is the IRA contribution limit for 2026?
For 2026 the limit is $7,500 if under 50 and $8,600 at 50-plus, across all your IRAs combined (traditional and Roth together). The limit is per person, so a married couple can contribute up to double, provided household earned income covers it. Contributions for 2026 can be made until the April 2027 filing deadline.
Can I contribute to both a 401(k) and an IRA?
Yes. Having a workplace plan does not stop IRA contributions, but it can limit the traditional IRA deduction at higher incomes — for 2026 the deduction phases out from $81,000 to $91,000 of modified AGI for single filers. Roth IRA contributions have their own income phase-outs. The limits for each account type are separate.
When can I withdraw IRA money without penalty?
From age 59½, for both types. Traditional withdrawals are taxed as income whenever they happen. Earlier withdrawals are usually taxed plus a 10% penalty, with exceptions including certain education costs, up to $10,000 for a first home, and substantially equal periodic payments under rule 72(t).
What happens if I contribute too much to an IRA?
The excess is taxed at 6% for every year it stays in the account. You can avoid the penalty by withdrawing the excess and its earnings before the tax filing deadline for that year. Contribution room is use-it-or-lose-it each year, but over-contributing is worse than missing a year.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.