About the Traditional IRA Calculator
A Traditional IRA lets investments grow tax-deferred. Contributions may be tax-deductible depending on your income and whether you have a retirement plan at work, and withdrawals in retirement are generally taxed as ordinary income.
Because taxes are paid later rather than now, comparing a Traditional IRA with a Roth IRA often comes down to your expected tax rate today versus in retirement.
How It Works
The calculator grows your current balance and your annual contribution (spread evenly across 12 months) at the monthly equivalent of your expected return for the number of years you enter.
If you enter an expected retirement tax rate, it also shows an illustrative after-tax value: the projected balance reduced by that rate.
- Traditional IRA: contributions may be deductible now; withdrawals are taxed later; required minimum distributions apply.
- Roth IRA: contributions are not deductible; qualified withdrawals, including growth, are tax-free; no lifetime RMDs for the original owner.
- Both share one annual contribution limit and grow the same way before taxes.
Formula
Example
A 30-year-old with $5,000 in a Traditional IRA contributes $7,000 a year for 35 years at an assumed 7% return and expects a 22% tax rate in retirement.
Inputs
- Balance
- $5,000
- Contribution
- $7,000/yr
- Return
- 7.00%
- Years
- 35
Results
- Estimated value
- $1,051,707.53
- After-tax at 22%
- $820,331.87
The pre-tax projection is identical to a Roth IRA with the same inputs; the difference is when taxes are paid.
Assumptions & Limitations
- Flat retirement tax rate for the illustration; real withdrawals are taxed through brackets and may be spread over many years.
- Tax savings from deductible contributions today are not modelled.
- Not included: required minimum distributions, early-withdrawal penalties, fees, and inflation.
- Contribution limit from the latest year in the centralized data is used for a warning only.
Understanding Your Results
- Estimated Future Value: Projected pre-tax balance at retirement.
- Illustrative After-Tax Value: The balance reduced by the tax rate you entered, for comparison with a Roth IRA.