Calculate your tax-free retirement savings growth in a Roth IRA. See how much you'll have at retirement — and how much you'll save in taxes versus a Traditional IRA or taxable account.
Contribution limits, income thresholds, and growth projections
Enter your annual contribution, expected return, and years until retirement to see your projected tax-free balance.
Open Retirement Calculator →The Roth IRA is widely considered the most flexible and tax-advantaged retirement account available to individual investors. Unlike most tax-advantaged accounts, the Roth IRA lets your money grow completely tax-free — you pay taxes on contributions now, and everything you withdraw in retirement (including decades of investment growth) is 100% tax-free.
$500 per month invested at 7% average return for 30 years grows to approximately $567,000. In a taxable account, you would owe capital gains taxes on the gains at withdrawal. In a Traditional IRA, you would owe ordinary income tax on the full $567,000. In a Roth IRA, you owe nothing — keeping potentially $100,000 or more that would otherwise go to the IRS.
To contribute to a Roth IRA, you must have earned income (wages, salary, self-employment income) and your modified adjusted gross income (MAGI) must fall below the IRS income limits. For 2024: single filers can contribute the full $7,000 up to $146,000 MAGI, with a phase-out between $146,000 and $161,000. Married filing jointly: full contribution up to $230,000, phase-out through $240,000.
You cannot contribute to a Roth IRA if your only income is from Social Security, pensions, rental income, or investment income. You also cannot contribute more than your earned income — if you earn $4,000, your Roth IRA contribution is capped at $4,000 regardless of the $7,000 limit.
If your income exceeds the Roth IRA limits, the backdoor Roth strategy is a legal workaround. The process: (1) Contribute up to $7,000 to a non-deductible Traditional IRA — there is no income limit for this. (2) Convert the Traditional IRA to a Roth IRA — pay taxes only on any earnings that accrued (usually minimal if converted quickly). (3) Your funds are now in a Roth IRA growing tax-free. Repeat annually. This strategy is well-established, explicitly allowed under IRS rules, and used by millions of high-income earners each year.
The core difference: Traditional IRA contributions may be tax-deductible (reducing income now), but withdrawals are taxed. Roth IRA contributions are made after-tax, but withdrawals are tax-free. Traditional IRA requires minimum distributions starting at age 73; Roth IRA has no RMDs, allowing unlimited tax-free growth throughout your lifetime.
Both use after-tax contributions and grow tax-free. Key differences: Roth 401k has a much higher contribution limit ($23,000 vs $7,000), no income limits, and is available through employer plans. Roth IRA offers broader investment options, no RMDs (Roth 401k does have RMDs unless rolled over), and penalty-free access to contributions anytime. Ideally, use both — max the Roth IRA first if you have a choice.
To withdraw Roth IRA earnings completely tax- and penalty-free, two conditions must be met: (1) You must be at least 59½ years old. (2) Your Roth IRA account must have been open for at least 5 years (the 5-year rule). The clock starts January 1 of the tax year in which you make your first Roth IRA contribution. Importantly, your original contributions — not earnings — can always be withdrawn tax-free and penalty-free at any age, making the Roth IRA an excellent emergency backup for disciplined investors.
Contribution limit: $7,000 ($8,000 if 50+). Income limits: single filers phase out $146K–$161K; married filing jointly phase out $230K–$240K. Above these limits, use the Backdoor Roth strategy — contribute to Traditional IRA, then convert to Roth.
Three key advantages: (1) Tax-free growth and qualified withdrawals — no taxes on earnings in retirement. (2) No Required Minimum Distributions — let money grow indefinitely. (3) Access to contributions anytime penalty-free, making it a flexible emergency backup fund.
High earners above $161K single / $240K married who can't contribute directly to a Roth IRA should use the backdoor strategy: (1) Contribute to a non-deductible Traditional IRA. (2) Convert to Roth IRA immediately. Taxes are due only on earnings (usually minimal). Legal, IRS-approved, and widely used.
To withdraw Roth IRA earnings tax-free and penalty-free, your account must be open at least 5 years AND you must be 59½+. The 5-year clock starts January 1 of the year of your first contribution. Contributions (not earnings) can always be withdrawn free of taxes and penalties at any time, any age.