IRA Calculator
Calculate your Traditional IRA growth with tax-deferred contributions and withdrawals. See how pre-tax savings grow over time and compare with Roth IRA options.
IRA Results
Annual Summary
Tax Comparison
Understanding Traditional IRAs
A Traditional IRA is a retirement savings account that offers tax advantages for retirement planning. Contributions are made with pre-tax dollars, growth is tax-deferred, and withdrawals are taxed as ordinary income.
Traditional IRA vs Roth IRA
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax Treatment | Pre-tax contributions, taxable withdrawals | After-tax contributions, tax-free withdrawals |
| Current Tax Benefit | Current tax deduction | No current deduction |
| Required Minimum Distributions | RMDs required at age 73 | No RMDs during lifetime |
| Income Limits | No income limits for contributions | Modified AGI limits for contributions |
| Best For | Lower future tax rates | Higher future tax rates |
Contribution Limits
Traditional IRA contribution limits are set by the IRS and adjusted annually for inflation.
- 2024 Contribution Limit: $7,000 (plus $1,000 catch-up if age 50+)
- Income Limits: No income limits for Traditional IRA contributions
- Deductibility: Contributions may be tax-deductible depending on income and employer plan participation
Tax Deduction Rules
- Full Deduction: If not covered by employer retirement plan
- Partial Deduction: Phase-out based on modified AGI if covered by employer plan
- No Deduction: Spousal IRA contributions may not be deductible
- Non-Working Spouse: Can contribute to spousal IRA
Required Minimum Distributions (RMDs)
Traditional IRAs require minimum withdrawals starting at age 73 (or 75 if born after 1950).
- Starting Age: April 1 following the year you turn 73
- Calculation: Account balance ÷ life expectancy factor
- Penalties: 25% penalty for missing RMDs (reduced to 10% if corrected)
- Qualified Charitable Distributions: RMDs can be donated tax-free
Withdrawal Rules
- Early Withdrawals: Before age 59½ incur 10% penalty plus taxes
- Qualified Withdrawals: Penalty-free after age 59½
- Exceptions: First-time home purchase, education, disability
- Taxation: Withdrawals taxed as ordinary income
Investment Options
Traditional IRAs offer the same investment choices as Roth IRAs:
- Stocks and Bonds: Individual securities or ETFs
- Mutual Funds: Actively or passively managed funds
- Target Date Funds: Automatically adjust asset allocation
- Certificates of Deposit: Low-risk, guaranteed returns
- Alternative Investments: Through self-directed accounts
Pro Tip: Traditional IRAs are ideal if you expect to be in a lower tax bracket in retirement or want current tax deductions. Consider Roth conversions when in a low-income year to reduce future RMD tax burdens.