Question 1

What is a Roth IRA and how does it work?

Accepted Answer

A Roth IRA is a retirement account where you contribute after-tax dollars, but all qualified withdrawals in retirement are tax-free. Unlike traditional IRAs, you pay taxes now but not in retirement. Ideal for those expecting higher tax rates in retirement.

Question 2

What are Roth IRA contribution limits?

Accepted Answer

For 2024, the contribution limit is $7,000 for those under 50, or $8,000 for those 50+ (includes $1,000 catch-up contribution). There are income limits for eligibility. Contributions can be withdrawn penalty-free at any time, but earnings have restrictions.

Question 3

How do I calculate Roth IRA growth?

Accepted Answer

Enter your current balance (optional), annual contribution, expected return, and years to retirement. The calculator shows future value, total contributions, investment growth, and tax-free withdrawal amount. All qualified withdrawals in retirement are tax-free.

Question 4

When can I withdraw from a Roth IRA tax-free?

Accepted Answer

Qualified withdrawals (after age 59½ and 5-year holding period) are tax-free. Contributions can be withdrawn penalty-free at any time. Early withdrawals of earnings may incur taxes and penalties. The calculator shows your tax-free withdrawal amount at retirement.

Question 5

Should I choose Roth IRA or traditional IRA?

Accepted Answer

Choose Roth IRA if you expect higher tax rates in retirement, want tax-free withdrawals, or want no required minimum distributions (RMDs). Choose traditional IRA if you want tax deductions now and expect lower tax rates in retirement. Many people use both.

Roth IRA Calculator - Tax-Free Retirement Savings Growth & Contribution Calculator

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