Calculate and compare Traditional IRAs, SEP IRAs, SIMPLE IRAs, Roth IRAs, and regular taxable savings. Estimate growth, tax savings, and balance at retirement.
An Individual Retirement Account (IRA) is a tax-advantaged retirement savings account designed to help individuals save for retirement. The IRS provides different types of IRAs, each with unique contribution limits, tax treatments, and withdrawal rules to incentivize long-term retirement savings.
This calculator helps you compare Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and regular taxable savings to determine which option provides the best after-tax balance at retirement based on your specific situation.
Pay taxes on withdrawals in retirement
No taxes on qualified withdrawals
For self-employed and small business owners
For small businesses with 100 or fewer employees
| IRA Type | Under Age 50 | Age 50+ | Income Limits (2025) |
|---|---|---|---|
| Traditional IRA | $7,000 | $8,000 | Phase-out begins at $77K-$87K (single) |
| Roth IRA | $7,000 | $8,000 | Phase-out: $138K-$153K (single) |
| SEP IRA | 25% of compensation | 25% of compensation | Up to $70,000 |
| SIMPLE IRA | $16,000 | $19,500 | No income limits |
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Contributions | Tax-deductible | After-tax |
| Growth | Tax-deferred | Tax-free |
| Withdrawals | Taxed as ordinary income | Tax-free (qualified) |
| Required Distributions | Starting at age 73 | None for original owner |
| Early Withdrawal Penalty | 10% before age 59½ | 10% on earnings before 59½ |
| Tax Bracket | $7,000 Traditional IRA Tax Savings | Future Value at 6% (30 years) | Roth IRA After-Tax Value |
|---|---|---|---|
| 12% | $840 | $40,212 | $40,212 |
| 22% | $1,540 | $40,212 | $40,212 |
| 24% | $1,680 | $40,212 | $40,212 |
| 32% | $2,240 | $40,212 | $40,212 |
Traditional IRAs: Must begin taking RMDs at age 73. The amount is calculated based on IRS life expectancy tables.
Roth IRAs: No RMDs for the original owner, making them excellent for estate planning.
RMD Calculation: IRA balance on December 31 of previous year ÷ Life expectancy factor from IRS tables.
| IRA Type | Contributions | Earnings | Exceptions to 10% Penalty |
|---|---|---|---|
| Traditional | Always taxed + 10% penalty | Always taxed + 10% penalty | First home, education, medical expenses |
| Roth | Always tax-free | 10% penalty if before 59½ | 5-year rule applies to earnings |
| Feature | SEP IRA | SIMPLE IRA |
|---|---|---|
| Eligibility | Any size business | 100 or fewer employees |
| Contribution Limit | 25% of compensation or $70,000 | $16,000 + $3,500 catch-up |
| Employer Match | Not required | Required (up to 3%) |
| Employee Contributions | No | Yes |
| Administrative Costs | Very low | Low |
Stocks and Stock Mutual Funds: Higher potential returns but more volatility. Suitable for long-term growth.
Bonds and Bond Funds: Lower volatility with steady income. Good for capital preservation.
Target-Date Funds: Automatically adjust allocation based on retirement date. Good for hands-off investors.
ETFs (Exchange-Traded Funds): Low-cost, diversified options with flexibility of individual stocks.
Beneficiary Designations: Keep beneficiary information current. IRAs pass directly to beneficiaries, bypassing probate.
Stretch Provisions: Under the SECURE Act, most non-spouse beneficiaries must withdraw within 10 years.
Spouse Beneficiaries: Can treat inherited IRA as their own or maintain as inherited IRA.
Excess Contributions: Contributing more than the annual limit results in 6% penalty per year until corrected.
Missing RMDs: Penalty is 25% of the amount that should have been withdrawn (reduced to 10% if corrected quickly).
Early Withdrawals: 10% penalty plus regular income tax can significantly reduce retirement savings.
Not Maximizing Employer Match: In SIMPLE IRAs, always contribute enough to get the full employer match.