The Roth IRA Calculator here is a fixed rate calculator that is used to calculate Roth IRA balance savings and compares it with normal taxable savings. The calculator also assumes contribution that you have to make at end of each month/year.
Roth IRA refers to a particular type of IRA (Individual Retirement Arrangement) that offers tax-free growth. There are a couple of major differences between traditional IRA and Roth IRA. These include:
1. Roth IRA contributions aren't tax deductible. 2. Any direct contributions made to Roth IRA can be withdrawn free of tax whenever you want without any penalty.
With Roth IRA, you get tax-free income after retirement. Even though you don't have to pay any tax on the funds that you place in Roth IRA, but all advantages actually come later. So, Roth IRA can be quite useful for those who may be in higher tax group in retirement as compared to where they used to be in most part of their working life. Usually, the workers making comparatively low income will not miss out on tax deductions on funds that they've put in Roth IRA. However, when they'll save and invest for many long years and will move up to higher income group, it turns out to be quite handy for them to have their retirement income coming tax-free.
Most of the Americans falling in the middle-income group are eligible to make Roth IRA contributions. In addition, if you have to make Roth IRA Contributions, you should’ve earned income - including wages, tips, self-employment income, bonuses, etc. - in same year you'd like to make contributions. Contribution limits for 2016, 2017 remained at $5500 for those aged 49 or below and at $6500 for those aged 50 or above.
When you are 59 and half, it is possible for you to start taking your tax-free distributions coming from Roth IRA. Observing 5-year rule is very important. Mostly, people set up Roth IRAs very early in the working life. They keep the Roth IRAs for quite a few years as well so they don't usually have any issues. You can also convert your traditional IRAs to Roth IRAs - tax rules here tend to be quite complex, however, and you have to attentively follow them too. With the Roth IRA calculator here, you can get estimates on your balance as well as interest saving for the contributions to Roth IRA.
This Roth IRA calculator here requires you to enter quite a few numbers before it calculates the results for you. These include your current balance, annual contribution, current age, annual investment return, retirement age, inflation rate and marginal tax rate.
Once you hit the calculate button, the Roth IRA calculator will give you Roth IRA & Regular Taxable Savings values for balance at the age of 65, Total Principal, Total Interest, Total Tax and Equivalent Today’s Purchasing Power.
The Roth IRA calculator also shows a complete table for Principal, Roth IRA and Regular Taxable Savings at the end of each year.