About the Roth IRA Calculator
A Roth IRA flips the traditional formula: you contribute after-tax money, but nothing is ever taxed again — gains, dividends, or qualified withdrawals are income-tax-free forever. Combined with a 25-year + compounding horizon, that tax-free leg has no equivalent in taxable accounts.
Since 2026 caps are $7,500 per year plus the $1,100 catch-up at 50+, this tool projects the after-tax dollars flowing into a Roth as they compound over decades.
The formula behind it
Standard compounding of after-tax dollars:
FV = Balance × (1+r)^y + contribution × ((1+r)^y −1)/rBalance is your existing Roth investment; contributions are the level annual flows; r is your assumed annual return; y is the horizon in years. All future withdrawals of contributions are unrestricted — gains only need age 59½ + a 5-year seasoning rule to come out tax-free.
Worked example
Defaults — $10,000 now, $7,500/yr (the 2026 max), 25 years at 7%:
- The $10,000 seed grows to about $54,000.
- Contributions totaling $187,500 compound to roughly $474,400.
Takeaway: ≈ $529,000 projected — every dollar of appreciation and qualified withdrawal remains untaxed. On a same-situation taxable account, decades of gains taxes can easily redirect 15–20% of this result.
What moves the result
- Contribution caps — $7,500 in 2026 ($8,600 if you’re 50+), all governed by income phase-outs beginning in the low-$100,000s.
- Early access — contributions (not earnings) can be withdrawn tax-and-penalty-free any time; the withdrawal flexibility is one of the Roth’s most underrated features.
- Tax layering — after-tax contributions and taxable-income interactions matter; your marginal bracket now vs at retirement decides the conventional Roth-vs-traditional call.
- Required Minimum Distributions — none during the owner’s lifetime (unlike modern traditional IRAs, excepting certain change-over provisions), which allows dynasty planning.
Practical tips
- Open the account at any custodian and confirm the pre-filled investment choice; defaults are often money-market and cost you decades of growth.
- Be aware of the income limits: single filers phase out of direct Roth contributions above $153,000 (2026) — the backdoor conversion is a separate pathway many consult a tax professional before using.
- Important: for DEDUCTION —take the 5-year clock functions separately for EACH Roth account; multiple accounts have different seasons.
- In an emergency, contributions can come out penalty-free — a pipeline worth modeling before diverting all marginal dollars to tax-locked funds.
- Estate-planning: Roth IRAs pass to heirs with income-tax-free appreciation intact.
Frequently asked questions
What are the 2026 Roth IRA contribution limits?
$7,500 ($8,600 for ages 50+), with income phase-outs beginning at $153,000 (single) and $242,000 (married filing jointly). See the IRS links in the source line below.
Do I pay taxes when I withdraw Roth gains?
No — qualified withdrawals (age 59½+, account seasoned 5+ years) are entirely tax-free. Only early withdrawals of earnings trigger tax plus a 10% penalty.
Can you roll over a Roth 401(k) to a Roth IRA?
Yes — direct rollover moves it into a Roth IRA with no tax consequence and removes the RMD restriction the Roth 401k carries.