About the IRA Calculator
A traditional IRA calculator projects the balance at withdrawal and the after-tax value once income tax is applied. Because traditional IRA withdrawals are taxed as ordinary income, the gross balance overstates what you actually get to spend.
The formula
After-tax value = FV · (1 − tax rate)Contributions may be tax-deductible now, growth is tax-deferred, and withdrawals are taxed as ordinary income at your rate in retirement.
How to use this calculator
- 1Enter your Current Balance ($). The field starts at
20000, which you can overwrite. - 2Enter your Annual Contribution ($). The field starts at
7000, which you can overwrite. - 3Enter your Expected Annual Return (%). The field starts at
7, which you can overwrite. - 4Enter your Years to Grow. The field starts at
30, which you can overwrite. - 5Enter your Estimated Withdrawal Tax Rate (%). The field starts at
22, which you can overwrite. - 6Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Current Balance ($) | 20000 |
| Annual Contribution ($) | 7000 |
| Expected Annual Return (%) | 7 |
| Years to Grow | 30 |
| Estimated Withdrawal Tax Rate (%) | 22 |
Result
Pre-Tax Balance: $859,756.39
After-Tax (at 22%): $670,609.98
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Tax deferral is genuinely valuable because the money that would have gone to tax stays invested and compounds. Over thirty years that additional growth is substantial, which is why deferral is worth having even if your retirement tax rate matches your current one.
The critical point is that the headline balance is pre-tax. A million dollar traditional IRA at a 22 percent rate is 780,000 dollars of spendable money, and comparing it directly against a Roth balance of the same size is comparing unlike things. Required minimum distributions from age 73 also force taxable withdrawals whether you need the money or not.
Things worth knowing
- Deductibility of contributions phases out at higher incomes if you have a workplace retirement plan.
- Required minimum distributions begin at 73 and carry a substantial penalty if missed.
- Early withdrawals before 59½ generally attract a 10 percent penalty on top of income tax.
- Converting to a Roth in a low-income year can be tax-efficient, though the conversion itself is taxable.
- Always compare traditional and Roth balances on an after-tax basis, never gross against gross.
Frequently asked questions
How is a traditional IRA taxed?+
Contributions may be deductible now, growth is untaxed while it stays in the account, and withdrawals are taxed as ordinary income. This is why the gross balance overstates spendable value.
When must I start withdrawing?+
Required minimum distributions begin at age 73 under current US rules. Missing one attracts a penalty of 25 percent of the shortfall, reducible to 10 percent if corrected promptly.
Can I contribute to both an IRA and a 401(k)?+
Yes, though the deductibility of IRA contributions phases out at higher incomes when you have a workplace plan. The contribution limits are separate.
What happens if I withdraw early?+
Withdrawals before 59½ generally face a 10 percent penalty plus ordinary income tax. Exceptions exist for first-home purchase, higher education, disability, and certain medical expenses.