traditional roth ira Roth IRA calculator

Should i do a traditional or roth ira

Start simple, with your age and income. Then compare the IRA rules and tax benefits.

IRA eligibility

Is there an age limit?

ROTH IRA
You can contribute to a Roth IRA at any age.

TRADITIONAL IRA
As a result of changes made by the SECURE Act, you can make contributions to a traditional IRA for 2020 or later regardless of your age.

How does my income affect how much I can contribute?

ROTH IRA
The amount you can contribute to a Roth IRA:

  • Can't exceed the amount of income you earned that year.
  • Can't exceed the IRS-imposed limits (see below).
  • Could be reduced—or even eliminated—based on your modified adjusted gross income (MAGI).

Get details on Roth IRA income limits

TRADITIONAL IRA
The amount you can contribute to a traditional IRA:

  • Can't exceed the amount of income you earned that year.
  • Can't exceed the IRS-imposed limits (see below).

There are no additional restrictions based on your income.

Can minors or nonworking spouses contribute to an IRA?

ROTH IRA
Minors and nonworking spouses may be able to contribute, but check the special income rules first.

TRADITIONAL IRA
Minors and nonworking spouses may be able to contribute, but check the special income rules first.

ROTH IRA TRADITIONAL IRA

Is there an age limit?

You can contribute to a Roth IRA at any age. As a result of changes made by the SECURE Act, you can make contributions to a traditional IRA for 2020 or later regardless of your age.

How does my income affect how much I can contribute?

The amount you can contribute to a Roth IRA:
  • Can't exceed the amount of income you earned that year.
  • Can't exceed the IRS-imposed limits (see below).
  • Could be reduced—or even eliminated—based on your modified adjusted gross income (MAGI).

Get details on Roth IRA income limits

The amount you can contribute to a traditional IRA:

  • Can't exceed the amount of income you earned that year.
  • Can't exceed the IRS-imposed limits (see below).

There are no additional restrictions based on your income.

Can minors or nonworking spouses contribute to an IRA?

Minors and nonworking spouses may be able to contribute, but check the special income rules first. Minors and nonworking spouses may be able to contribute, but check the special income rules first.

IRA contribution rules

What are the contribution limits?

ROTH IRA
For the 2021 tax year:

  • If you're under age 50, you can contribute up to $6,000.
  • If you're age 50 or older, you can contribute up to $7,000.

Limits could be lower based on your income.

Get details on IRA contribution limits & deadlines

TRADITIONAL IRA
For the 2021 tax year:

  • If you're under age 50, you can contribute up to $6,000.
  • If you're age 50 or older, you can contribute up to $7,000.

Limits could be lower based on your income.

Get details on IRA contribution limits & deadlines

Can I claim my contribution as a deduction on my tax return?

ROTH IRA
You can't deduct your Roth IRA contribution.

TRADITIONAL IRA
You may be able to deduct some or all of your traditional IRA contributions. The deductible amount could be reduced or eliminated if you or your spouse is already covered by a retirement plan at work.

Get details on IRA deductions

What's the deadline for making contributions in a given year?

ROTH IRA
The deadline is typically April 15 of the following year.

TRADITIONAL IRA
The deadline is typically April 15 of the following year.

How much money do I need to open a Vanguard IRA®?

ROTH IRA
You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR® Fund.

Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums.

TRADITIONAL IRA
You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR Fund.

Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums.

ROTH IRA TRADITIONAL IRA

What are the contribution limits?

For the 2022 tax year:

  • If you're under age 50, you can contribute up to $6,000.
  • If you're age 50 or older, you can contribute up to $7,000.

Limits could be lower based on your income.

Get details on IRA contribution limits & deadlines

For the 2022 tax year:

  • If you're under age 50, you can contribute up to $6,000.
  • If you're age 50 or older, you can contribute up to $7,000.

Limits could be lower based on your income.

Get details on IRA contribution limits & deadlines

Can I claim my contribution as a deduction on my tax return?

You can't deduct your Roth IRA contribution.

You may be able to deduct some or all of your traditional IRA contributions. The deductible amount could be reduced or eliminated if you or your spouse is already covered by a retirement plan at work.

Get details on IRA deductions

What's the deadline for making contributions in a given year?

The deadline is typically April 15 of the following year. The deadline is typically April 15 of the following year.

How much money do I need to open a Vanguard IRA®?

You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR® Fund.

Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums.

You'll need $1,000 for any Vanguard Target Retirement Fund or for Vanguard STAR Fund.

Most other Vanguard funds require an initial investment of at least $3,000, though some have higher minimums.

IRA withdrawal rules

Will I pay taxes on withdrawals?

ROTH IRA
You'll never pay taxes on withdrawals of your Roth IRA contributions. And you won't pay taxes on withdrawals of your earnings as long as you take them after you've reached age 59½ and you've met the 5-year-holding-period requirement.

Get details on IRA withdrawals

TRADITIONAL IRA
You'll pay ordinary income tax on withdrawals of all traditional IRA earnings and on any contributions you originally deducted on your taxes.

Get details on IRA withdrawals

Is there a penalty for withdrawals taken before age 59½?

ROTH IRA
There are no penalties on withdrawals of Roth IRA contributions. But there's a 10% federal penalty tax on withdrawals of earnings.

Exceptions to the penalty tax

TRADITIONAL IRA
With a traditional IRA, there's a 10% federal penalty tax on withdrawals of both contributions and earnings.

Exceptions to the penalty tax

Will I have to take required minimum distributions (RMDs)?

ROTH IRA
Roth IRAs have no RMDs during your lifetime.

TRADITIONAL IRA
You must take your first RMD from your traditional IRA by April 1 of the year following the year you reach age 72 (age 70½ if you attained age 70½ before 2020).

For each subsequent year, you'll need to take your annual RMD by December 31.

Get details on RMDs

ROTH IRA TRADITIONAL IRA

Will I pay taxes on withdrawals?

You'll never pay taxes on withdrawals of your Roth IRA contributions. And you won't pay taxes on withdrawals of your earnings as long as you take them after you've reached age 59½ and you've met the 5-year-holding-period requirement.

Get details on IRA withdrawals

You'll pay ordinary income tax on withdrawals of all traditional IRA earnings and on any contributions you originally deducted on your taxes.

Get details on IRA withdrawals

Is there a penalty for withdrawals taken before age 59½?

There are no penalties on withdrawals of Roth IRA contributions. But there's a 10% federal penalty tax on withdrawals of earnings.

Exceptions to the penalty tax

With a traditional IRA, there's a 10% federal penalty tax on withdrawals of both contributions and earnings.

Exceptions to the penalty tax

Will I have to take required minimum distributions (RMDs)?

Roth IRAs have no RMDs during your lifetime.

You must take your first RMD from your traditional IRA by April 1 of the year following the year you reach age 72 (age 70½ if you attained age 70½ before 2021).

For each subsequent year, you'll need to take your annual RMD by December 31.

Get details on RMDs

Which is better a traditional or Roth IRA?

With a Roth IRA, you contribute after-tax dollars, your money grows tax-free, and you can generally make tax- and penalty-free withdrawals after age 59½. With a Traditional IRA, you contribute pre- or after-tax dollars, your money grows tax-deferred, and withdrawals are taxed as current income after age 59½.

Is it worth having a Roth and traditional IRA?

It may be appropriate to contribute to both a traditional and a Roth IRA—if you can. Doing so will give you taxable and tax-free withdrawal options in retirement. Financial planners call this tax diversification, and it's generally a smart strategy when you're unsure what your tax picture will look like in retirement.

What is the downside of a Roth IRA?

One key disadvantage: Roth IRA contributions are made with after-tax money, meaning there's no tax deduction in the contribution year. Another drawback is that withdrawals of account earnings must not be made until at least five years have passed since the first contribution.

Is it better to have a Roth or traditional 401k?

If you're young and confident that you'll be earning more and in a higher tax bracket in the future, the Roth 401(k) may be a good choice. But even if you're in your 40s, 50s or 60s, you might want to take a close look at the Roth option.

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