Roth IRA Calculator – Compare Roth IRA vs Taxable Account Returns

This calculator estimates the balances of Roth IRA savings and compares them with regular taxable accounts. It helps you visualize the long-term benefits of tax-free growth in a Roth IRA.

Calculator Inputs

Current balance

$

Annual contribution

$

Maximize contributions?

Yes No

Expected rate of return

Current age

Retirement age

Marginal tax rate

Results

	Roth IRA	Taxable account
Balance at age 65	$933,765	$663,823
Total principal	$265,000	$265,000
Total interest	$675,765	$531,764
Total tax	$0	$132,941

According to provided information, the Roth IRA account can accumulate $269,942 more than a regular taxable account by age 65.

Balance Accumulation Graph

Annual Schedule

	Principal		Roth IRA		Taxable account
Age	Start	End	Start	End	Start	End

About Roth IRAs

A Roth IRA is a type of Individual Retirement Arrangement (IRA) that provides tax-free growth and tax-free income in retirement. The major difference between Roth IRAs and traditional IRAs is that contributions to the former are not tax-deductible, and contributions (not earnings) may be withdrawn tax-free at any time without penalty.

Roth IRA Contributions

Made using after-tax dollars.
Not tax-deductible. However, there is a tax credit, the Saver’s Tax Credit, that can be claimed for up to 50% on the first $2,000 in contributions.
Contributions can be withdrawn tax-free at any time without penalty.
For 2023, the contribution limit is $6,500 for those under age 50, and $7,500 for those 50 and older.
Income limits apply. For 2023, the ability to contribute begins phasing out at $138,000 for single filers and $218,000 for married filing jointly.

Pros of Roth IRA

Tax-free withdrawals in retirement – Since you pay taxes upfront, qualified withdrawals in retirement are completely tax-free.
No required minimum distributions – Unlike traditional IRAs, Roth IRAs don’t require you to take minimum distributions during your lifetime.
Easy access to contributions – You can withdraw your contributions (but not earnings) at any time without taxes or penalties.
Tax diversification – Having both tax-deferred and tax-free accounts can provide flexibility in managing your tax situation in retirement.

When a Roth IRA Makes Sense

You expect to be in a higher tax bracket in retirement than you are now.
You’re early in your career with lower current income but expect higher income in the future.
You want to diversify your retirement accounts for tax purposes.
You want to leave tax-free money to your heirs.
You want flexibility to access contributions without penalties if needed.