Roth IRA Calculator: Estimate Your Retirement Savings

A Roth IRA is a retirement savings account that allows you to contribute after-tax dollars. Your investments grow tax-free, and you can make tax-free withdrawals in retirement. Unlike traditional IRAs, Roth IRAs don’t require minimum distributions during your lifetime, making them an excellent tool for retirement planning and estate planning.

For 2023, the Roth IRA contribution limits are $6,500 for individuals under 50 and $7,500 for those 50 and older. These limits are subject to income restrictions. If your modified adjusted gross income (MAGI) exceeds certain thresholds, your contribution limit may be reduced or eliminated entirely.

For 2023, the Roth IRA income limits are as follows:

• Single filers: Phase-out begins at $138,000 and ends at $153,000
• Married filing jointly: Phase-out begins at $218,000 and ends at $228,000

If your income exceeds these limits, you may consider a backdoor Roth IRA strategy.

You can withdraw your Roth IRA contributions (but not earnings) at any time without taxes or penalties. For tax-free withdrawals of earnings, you must be at least 59½ years old and have held the account for at least five years. There are exceptions for first-time home purchases (up to $10,000), disability, and certain other circumstances.

The main difference between a Roth IRA and a traditional IRA is when you pay taxes. With a traditional IRA, you get a tax deduction for contributions but pay taxes on withdrawals. With a Roth IRA, you contribute after-tax dollars but enjoy tax-free withdrawals in retirement. Roth IRAs also don’t have required minimum distributions (RMDs) during your lifetime.