Traditional IRA Calculator
The tax a traditional IRA contribution saves this year, what the account grows to and leaves after tax, and what deferral is worth against a taxable account.
Result
Tax saved this year: $1,440.00
Assumes the contribution is deductible, which depends on your income and workplace plan. Not tax advice.
- What each year’s contribution really costs you
- $4,560.00
- Balance at retirement
- $829,421.27Estimate
- After tax on withdrawal
- $646,948.59Estimate
https://calcgallery.com/retirement-planning/traditional-ira-calculator/
Results are arithmetic on the returns, rates and horizons you enter, not a forecast and not investment, tax or retirement advice. The site supplies no expected return, inflation rate, contribution limit, tax rate or withdrawal rate. Real returns vary from year to year, and fees, taxes and the order of returns all change the outcome. Check anything that matters with a qualified adviser. Read the full disclaimer
How to use the Traditional IRA Calculator
- Enter what you contribute each year and your tax rate now, to see the tax the contribution saves.
- Enter your age now and at retirement, the return you want to assume and the tax rate you expect in retirement.
- Optionally enter the tax rate on gains in a taxable account, to see what the tax deferral itself is worth.
The tax saving
A deductible contribution comes off your taxable income, so it saves tax at your marginal rate. At 24%, a 6,000 contribution saves 1,440 this year, and costs you 4,560 out of pocket. That figure is simple arithmetic you can check, which is why the page leads with it.
What the account grows to
Each year’s contribution grows at the return you enter, untaxed while it stays in the account. On withdrawal the whole balance is taxed as income at your retirement rate. The page shows both the balance and what is left after that tax.
What deferral is worth
The taxable comparison invests the same out-of-pocket amount, the contribution less the tax saved, in an ordinary account where gains are taxed every year. Its return is the return you entered less tax at the gains rate you enter. The difference between that and the IRA after tax is the combined value of the deduction and of not paying tax on growth along the way. Taxing the account every year is a simplification: in practice some gains are taxed only when sold.
With your numbers
- Tax saved = $6,000.00 × 24% = $1,440.00
- 35 years at 7%: $829,421.27, or $646,948.59 after 22% tax
- Taxable account: $4,560.00 a year at 5.95% after tax = $502,765.38
Quick reference
Assumes the contribution is deductible, which depends on your income and workplace plan. Not tax advice.
| Example | Tax saved this year |
|---|---|
| 6,000 at 24%, 15% on gains | $1,440.00 |
| 6,000 at 0% | $0.00 |
| 6,000 at 37% | $2,220.00 |
| 24% now and later | $1,440.00 |
| With 50,000 already saved | $1,320.00 |
| 7,000 a year for 10 years | $2,240.00 |
Common questions about the Traditional IRA Calculator
- Is my contribution deductible?
- It depends. If neither you nor your spouse is covered by a retirement plan at work, a traditional IRA contribution is generally deductible. If you are covered, the deduction phases out above income thresholds that change every year. This page assumes the contribution is deductible and supplies no threshold; check the figures for your year.
- Traditional or Roth?
- The arithmetic turns on your tax rate now against your tax rate in retirement. With the same rate at both ends, a traditional and a Roth account leave exactly the same money for the same out-of-pocket cost. The Roth IRA calculator shows that comparison directly.
- What is a required minimum distribution?
- From a certain age, the IRS requires you to withdraw a minimum amount from a traditional IRA each year, based on your balance and a life expectancy table. The rules and the table change, so this page does not model them.
- Can I have both an IRA and a 401(k)?
- Yes. Having a workplace plan does not stop you contributing to an IRA, but it can limit whether the IRA contribution is deductible.