Roth IRA Calculator 2026

Roth IRA's tax structure is unusually generous. You pay tax on the contribution year (no deduction), but qualified withdrawals — after age 59½ AND 5 years in the account — are 100% tax-free, including all the investment growth. For a 35-year-old maxing $7K/year for 30 years at 7% return, that's roughly $725K of tax-free retirement money. If your marginal retirement bracket is 22%, the Roth approach saves you roughly $160K vs. an equivalent Traditional account on the way out.

Roth IRAs are also unique in three other ways: (1) contributions can be withdrawn anytime, tax- and penalty-free — making them useful as emergency-fund backups; (2) no Required Minimum Distributions during the original owner's lifetime, so the account can grow tax-free forever; (3) tax-free inheritance for beneficiaries, who must drain the account in 10 years (post-SECURE Act) but pay no income tax doing so.

The 2026 contribution limit ($7,500, or $8,600 with catch-up) is small enough that maxing it out is realistic for most middle-class households — but big enough that 30+ years of compounded contributions become a substantial slice of retirement income. The gap between "I contributed $1K/year" and "I maxed it" is hundreds of thousands of dollars at retirement.

Source: IRS Notice 2025-67.

Roth IRA direct contributions phase out as your Modified Adjusted Gross Income (MAGI) crosses certain thresholds. For 2026:

• Single / Head of Household: Full contribution under $150,000 MAGI · partial $150K–$165K · none above $165K
• Married filing jointly: Full under $236,000 · partial $236K–$246K · none above $246K
• Married filing separately (lived with spouse): Phase-out runs $0–$10K — effectively no Roth IRA available unless living apart full year

In the phase-out range, your contribution is reduced linearly. The IRS rounds reductions down to the nearest $10 with a $200 minimum if any contribution is allowed at all. Example: single filer with $158K MAGI is 8/15 of the way through the $150K–$165K phase-out, so contribution = $7,500 × (1 − 8/15) ≈ $3,500, rounded to $3,500.

MAGI is approximately your AGI for most filers. Specific add-backs include the student loan interest deduction, foreign-earned-income exclusion, and a few other niche items. For typical W-2 workers, your gross salary minus pre-tax 401(k), HSA, and FSA contributions is within a few percent of MAGI.

If your MAGI exceeds the direct contribution ceiling, the backdoor Roth IRA strategy unlocks Roth space at any income level. The mechanics: (1) contribute $7,500 to a Traditional IRA on a non-deductible basis (no income limit on Traditional contributions, just on the deduction); (2) immediately convert that Traditional IRA to Roth IRA. Since you got no deduction going in, there's nothing taxable on conversion — the $7,500 lands in your Roth IRA tax-free.

The pro-rata rule is the gotcha. If you have any existing pre-tax IRA balances (Traditional IRA from a 401(k) rollover, SEP-IRA, SIMPLE IRA), the IRS treats your conversion as a proportional mix of pre-tax and after-tax dollars. With $50K of pre-tax IRA money and $7K of new non-deductible contributions, the conversion is roughly 88% taxable. The standard fix: roll your pre-tax IRA balances into a workplace 401(k) before doing the backdoor (workplace plans don't count toward pro-rata calculations).

Backdoor Roth is fully legal — Congress confirmed it in 2018 — and widely used by high earners. The IRS has specifically declined to issue any "step transaction" challenges to people who contribute and convert in the same year. Most brokerages (Fidelity, Vanguard, Schwab) automate the entire workflow.

See the full Backdoor Roth IRA guide → (4-step how-to, pro-rata rule deep-dive, Form 8606 reporting, $200K worked example, 6 FAQs)

The Roth-vs-Traditional question reduces to your tax rate today vs your tax rate in retirement. Roth wins if your retirement bracket will be higher; Traditional wins if it'll be lower. For most middle-class workers earning $75K–$150K with modest expected retirement income, Traditional usually wins on pure expected value — but the gap is small enough that other factors (Roth's tax diversification, no RMDs, contribution flexibility) often tip the scales toward Roth.

Strong cases for Roth: (1) you're early-career in a low bracket; (2) you expect tax rates to rise broadly (politically plausible given long-run fiscal trends); (3) you're a high earner doing backdoor Roth (since Traditional wouldn't be deductible anyway); (4) you want estate-planning flexibility (no RMDs for original owner, tax-free inheritance); (5) you value the "contributions can be withdrawn anytime" emergency-fund feature.

Strong cases for Traditional: (1) you're in your peak earning years, expecting lower retirement income; (2) you need the deduction to lower current tax liability; (3) you're saving via 401(k) and your employer doesn't offer Roth 401(k); (4) you plan to live in a no-income-tax state in retirement (Florida, Texas, etc.) so withdrawals are state-tax-free anyway.

Many advisors recommend splitting contributions between Roth and Traditional for tax diversification — typically 50/50 if you're uncertain, weighted toward Traditional if you're a high earner today, weighted toward Roth if you're young or expect rising rates.