Single/Head of Household and Married, Filing Jointly are the available options for this analysis. Married Filing Separately and Qualifying Widow(er) statuses are not available options for this analysis.
Your birth date is required in order to determine Traditional IRA eligibility and your maximum annual IRA contribution. A person with earned income can contribute to a Traditional IRA if they are younger than 70½ years of age as of December 31. There is no age requirement with a Roth IRA.
This tool assumes annual household taxable compensation is equivalent to modified adjusted gross income (MAGI) for you and your spouse.
If you (and your spouse if Married, Filing Jointly is selected) are covered by an employer sponsored retirement plan like a 401(k), your ability to deduct your Traditional IRA contributions may be reduced or eliminated entirely based on your annual household taxable compensation. You still may be able to make non-deductible contributions to your Traditional IRA. Participation in an employer sponsored retirement plan does not impact your eligibility for a Roth IRA. Please refer to the IRA Contributions and Tax Filing Status section.
Provides the maximum contribution amounts you can contribute to an IRA.
The maximum annual IRA contribution for 2017 is $5,500, however if you are 50 years of age or older as of December 31, you may make an additional $1,000 catch-up contribution each year. Roth IRA contributions are phased out after annual household taxable compensation exceeds the thresholds presented in the table below. If your annual household taxable compensation is greater than the maximum phase out range per tax status, the calculator will not present the value of investing in a Roth IRA since you are ineligible.
|Tax Status||2017 Roth IRA contribution Annual Household Taxable Compensation phase-out range|
|Single||$118,000 - $133,000|
|Joint||$186,000 - $196,000|
Traditional IRA contributions may be tax-deductible as explained in the table below. If you are not covered by an employer-sponsored retirement plan, your contributions are fully deductible, regardless of your annual household taxable compensation.
|Tax Status||2017 IRA Deduction Annual Household Taxable Compensation Phase Out Range|
|Single—covered by an employer-sponsored retirement plan||<= $62,000
$62,001 - $71,999
|Single—not covered by an employer-sponsored retirement plan||Any||Fully deductible|
|Married Filing Jointly
$99,001 - $118,999
|Married Filing Jointly—You’re NOT covered by an employer-sponsored retirement plan but your spouse is||<= $186,000
$186,001 - $195,999
|Married Filing Jointly—you and your spouse are NOT covered by an employer-sponsored retirement plan||Any||Fully deductible|
Taxes due on a Traditional IRA are calculated from 2017 federal tax tables by selecting the highest tax rate using the annual household taxable compensation supplied. The Retirement Tax Rate is based on the same tax rate as the current rate or one bracket higher or lower than this rate based on your selection. When your current tax rate is equal to either the minimum or maximum tax brackets, the next two highest or lowest tax brackets are returned, respectively.
Note 1: The tool does not take into consideration the 3.8% Medicare Contribution Tax on Net Investment Income.
Note 2: When you are eligible to contribute to both a Traditional and a Roth IRA, your annual contributions to all IRAs are limited to the lesser of your taxable compensation or $5,500 per year ($6,500 if you’re at least 50 years old by 12/31 of the year for which you are contributing). You’re also subject to the individual maximum for each IRA. Please consult your tax advisor for additional guidance.
It is assumed that all interest and dividends are reinvested at the rate of return; therefore this is an annual total rate of return.
The default setting will be set to the maximum allowable amount ($5,500 <50 years old, $6,500 >=50 years old); however you can adjust to any amount less than the maximum. When the amount is set to $5,500 and you are now younger than 50 years of age, the calculator assumes the contribution amount will increase to the maximum $6,500 once you turn 50.
If your allowable Roth IRA contribution (provided to you on the eligibility results page of the tool) was less than $5,500, the maximum value on the Annual IRA Contributions slider will be reduced to match that amount and ensure an accurate comparison of IRA values on the chart provided on the next page of the tool.
Distributions from a Traditional IRA may be comprised of non-deductible contributions, deductible contributions and earnings/investment gains. Only withdrawals of non-deductible contributions will not be taxed.
Distributions from Roth IRAs are comprised of contributions (which are never deductible when made and will therefore not be taxed at withdrawal) and investment earnings/gains which must be considered qualified to be withdrawn tax-free. The calculator assumes that only qualified distributions will be taken from the Roth IRA account. A qualified distribution must satisfy two tests. The first is the five year test which mandates that tax-free withdrawals of investment earnings/gains cannot be taken until January 1 of the fifth year after the first year a Roth IRA account is established. The second test is that the distribution must meet one of the following criteria: you must be 59½ years old; the distribution is made to your beneficiary after your death; you become disabled and the distribution is attributable to your disability; or you are qualified to make a first-time homebuyer distribution.
Inflation is not accounted for in the calculations.