What is a Roth IRA?
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. Unlike a traditional IRA, you contribute after-tax dollars, but qualified withdrawals are completely tax-free.
2024 Roth IRA Contribution Limits
- Under Age 50: $7,000 per year
- Age 50 and Over: $8,000 per year (includes $1,000 catch-up)
Income Limits for Roth IRA (2024)
Your ability to contribute to a Roth IRA depends on your modified adjusted gross income (MAGI):
- Single Filers: Full contribution if MAGI is under $146,000; phases out up to $161,000
- Married Filing Jointly: Full contribution if MAGI is under $230,000; phases out up to $240,000
Benefits of a Roth IRA
- Tax-Free Growth: Investments grow without being taxed
- Tax-Free Withdrawals: Qualified withdrawals in retirement are tax-free
- No RMDs: No required minimum distributions during your lifetime
- Flexible Withdrawals: Contributions (not earnings) can be withdrawn anytime
- Estate Planning: Tax-free inheritance for beneficiaries
Roth IRA vs Traditional IRA
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Contributions | After-tax | Pre-tax (tax-deductible) |
| Withdrawals | Tax-free | Taxed as income |
| RMDs | None | Required at 73 |
When to Choose a Roth IRA
- You expect to be in a higher tax bracket in retirement
- You want tax-free income in retirement
- You want flexibility to withdraw contributions
- You want to leave tax-free money to heirs
Frequently Asked Questions
How accurate are the results?
The Roth IRA applies a standard formula to your inputs — accuracy depends on how precisely you measure those inputs. For planning and estimation, results are reliable. For high-stakes or professional decisions, cross-check the output with a domain expert or primary source.
Does this include Social Security income?
Most retirement calculators focus on portfolio-based savings. Social Security typically provides $1,500–$3,500/month for average earners — add this as an income offset when planning your required portfolio withdrawal rate.
How should I interpret the Roth IRA output?
The result is a calculated estimate based on the formula and your inputs. Compare it against the reference values or benchmarks shown on this page to understand whether your result is high, low, or typical. For decisions with real consequences, use the output as one data point alongside direct measurement and professional advice.
When should I use a different approach?
Use this calculator for quick, formula-based estimates. If your situation involves multiple interacting variables, time-varying inputs, or safety-critical decisions, consider a dedicated software tool, professional consultation, or direct measurement. Calculators are most reliable within their stated assumptions — check that your scenario matches those assumptions before relying on the output.