If you or your spouse retire before the age of 60, there is a 10% penalty. The IRA calculator can be used to assess and compare traditional IRAs, SEP IRAs, SIMPLE IRAs, Roth IRAs, and regular taxable savings. For comparative purposes, Roth IRA and regular taxable savings are converted into after-tax values. To calculate the Roth IRA with after-tax inputs, please use our Roth IRA calculator.
This calculator is primarily intended for use in the USA. Early withdrawals from IRAs or 401 (k), s are each subject to a 10% penalty as well as standard income tax. As the most commonly used IRA, traditional IRAs are qualified retirement plans that have tax shields for retirement savings. This only applies to people within a specific income range, as people with very high incomes are not allowed to contribute to a traditional IRA.
Existing qualified retirement plans, such as 401 (K), s, 403 (B), s, SIMPLE IRAs, or SEP IRAs, can be transferred to a traditional IRA or consolidated. A Roth IRA in particular allows your money to grow tax-free, which can be extremely beneficial for retirement savings if you maximize contributions each year. You can also choose to invest contributions from Roth IRA in bonds or certificates of deposit, all of which offer different return potential. Use the Roth IRA calculator below to determine your potential income and tax savings from contributions to this type of account.
Contributing to a traditional IRA can result in a current tax deduction and allow tax-deferred growth. While 401 (k) s are generally limited to very few investment options offered by employers and come with relatively high administrative fees, traditional IRAs offer almost limitless investment options. The Simplified Employee Pension (SEP) IRAs initiated by employers allow employers to make contributions to their employees’ IRA accounts. Savings Incentive Match Plan for Employee (SIMPLE) IRAs are primarily designed for small businesses with 100 or fewer employees because the administrative costs associated with a SIMPLE IRA are much lower than those required for a 401 (k).
It is possible to have IRA funds invest in precious metals, pensions, land, real estate investment trusts (REITs), or certificates of deposit (CDs). With this in mind, SD-IRAs are only recommended to experienced investors or people who are willing and able to work with a professional. While this Roth IRA calculator forecasts potential returns and benefits, it’s always best to consult a financial professional when making decisions that may impact your money and future. As a result, they could find that traditional IRAs are financially cheaper simply because taxation is done in retirement and not during the prime working years.
