Roth IRA Tax Calculator
For future savings, Traditional IRA and Roth IRA savings accounts can offer Americans some tax advantages that will help them build up their piggy banks for retirement.
See if your Roth IRA contribution is affected by your modified AGI for the 2018 - 2019 Tax Season
Creating a Roth IRA can make a big difference in retirement savings. There is no tax deduction for contributions made to a Roth IRA, however all future earnings are sheltered from taxes.
The Roth IRA provides truly tax-free growth. You may also make tax-free qualified withdrawals.
Each year the maximum contribution is dictated by the annual amount allowed for that year, or 100% of employment compensation, whichever is less.
A distribution from a Roth IRA is federally tax-free and penalty-free provided that the five-year aging requirement has been satisfied and one of the following conditions are met:
- You are at the age of 59½ or older
- You are making a qualified first home purchase
- In the event of your death
You may qualify to make catch-up contributions to a Roth IRA.
IRA Catch-up Contributions: Individuals age 50 or older (in the calendar year for their contribution) can contribute an additional $1,000 each year based on 2018 - 2019 tax laws. Catch-up contributions are due by the standard April due date for your tax return (not including any extensions).
Annual Contribution: Your maximum allowable annual IRA contribution can be calculated below. It is important to note that this is the maximum contribution allowed based on the total amount contributed to all of your Roth IRA accounts.
Use our Individual Retirement Account Calculator to determine your allowable Roth IRA contribution.
Your Modified Adjusted Gross Income (MAGI) is what is used to determine your eligibility and the amount you can contribute to a Roth IRA retirement savings account.
Try Our Free IRA Contribution Tax Calculator
Roth IRA contributions are limited for higher income earners. If your income falls within the 'phase-out' range, you are only allowed a prorated contribution. If your income exceeds the phase-out range, you won't qualify to make any contribution to a Roth IRA.
The Roth IRA contribution limit increases with inflation in $500 increments. An annual change to the contribution limit will only occur when the cumulative effect of inflation since the previous adjustment equals $500 or more.
Withdrawals may be subjected to penalties if they do not meet the proper guidelines for penalty free distributions. A non-qualified distribution will be subjected to taxation of 10% on any earnings gained from that portion of the investment.
TurboTax offers Roth IRA Advice on How Individual Retirement Accounts can benefit your taxes.
While the calendar may state that it is time to file your TurboTax 2018 tax return, TurboTax points out in their blog that you can still make a previous year IRA contribution.
Truthfully, the fact is you can make a contribution up until the April 15 tax filing deadline for previous year income. Furthermore, many taxpayers are eligible to deduct their IRA contributions, thereby lowering their overall tax bill. Here’s a video overview of how IRAs affect your taxes.
Compare Roth IRA vs Traditional IRA
Since there are two different types of IRAs that you can use to save for retirement, you should evaluate both (Traditional IRAs and Roth IRAs) to help determine which one may be the most beneficial for your personal preference.