Traditional IRA Calculator
Calculate Traditional IRA growth, tax deductions, and retirement income projections.
2026 Traditional IRA Contribution Limits
Tax Deduction Eligibility
Tax Bracket Information
Traditional IRA works best when your current tax bracket is higher than your expected retirement bracket.
Growth Assumptions
Balance Breakdown
Traditional IRA vs. Roth IRA Comparison
Traditional IRA may be advantageous since your current tax bracket (22%) is higher than your expected retirement bracket (12%).
Required Minimum Distributions (RMDs)
Under SECURE Act 2.0, you must begin taking RMDs from your Traditional IRA at age 73. Unlike Roth IRAs, Traditional IRAs require mandatory withdrawals that are taxed as ordinary income.
Total at Retirement
$1,108,292
The Power of Tax-Deferred Growth
Your Traditional IRA contributions grow tax-deferred, meaning you do not pay taxes on dividends, interest, or capital gains until withdrawal. With $853,292 in tax-deferred growth and $50,820 in tax savings from deductions, your money compounds faster than in a taxable account. If your retirement tax bracket is lower than your current bracket, Traditional IRA offers significant advantages.
Important Traditional IRA Rules
Related Calculators
About This Calculator
A Traditional IRA offers immediate tax benefits that can significantly boost your retirement savings. Contributions may be tax-deductible, reducing your current tax bill, and your investments grow tax-deferred until withdrawal. This calculator helps you project how your Traditional IRA will grow and estimate your retirement income.
Key Benefits of Traditional IRAs:
- Tax-deductible contributions (subject to income limits if covered by workplace plan)
- Tax-deferred growth (no taxes on gains until withdrawal)
- Wide investment choices (stocks, bonds, mutual funds, ETFs)
- Lower current tax bill if you qualify for deduction
2026 Contribution Limits:
- Under age 50: $7,000 per year
- Age 50 and older: $8,000 per year (includes $1,000 catch-up)
The Deduction Question: If you or your spouse have a workplace retirement plan, your Traditional IRA deduction may be limited or eliminated based on income. If neither of you has a workplace plan, you can deduct the full contribution regardless of income.
Understanding whether a Traditional IRA or Roth IRA is better for your situation is crucial. Compare with our Roth IRA Calculator. For 401(k) planning, visit our 401k Calculator.
How to Use the Traditional IRA Calculator
- 1Enter your current age and planned retirement age.
- 2Input your current Traditional IRA balance (if any).
- 3Enter your planned annual contribution amount (up to $7,000, or $8,000 if 50+).
- 4Select your expected annual return rate (5-8% is typical for balanced portfolios).
- 5Enter your current and expected retirement tax brackets to compare outcomes.
- 6Review your projected balance at retirement and estimated monthly income.
- 7Compare with Roth IRA to see which provides better after-tax results.
Traditional IRA Tax Deduction Rules
The tax deduction is what makes Traditional IRAs attractive, but eligibility depends on your situation.
If You Have NO Workplace Retirement Plan
| Filing Status | Income Limit | Deduction |
|---|---|---|
| Any | No limit | Full deduction |
You can always deduct your full Traditional IRA contribution.
If YOU Have a Workplace Retirement Plan
Single/Head of Household (2026):
| MAGI | Deduction |
|---|---|
| $79,000 or less | Full deduction |
| $79,001 - $89,000 | Partial deduction |
| Over $89,000 | No deduction |
Married Filing Jointly:
| MAGI | Deduction |
|---|---|
| $126,000 or less | Full deduction |
| $126,001 - $146,000 | Partial deduction |
| Over $146,000 | No deduction |
If YOUR SPOUSE Has a Workplace Plan (But You Do Not)
| MAGI | Deduction |
|---|---|
| $236,000 or less | Full deduction |
| $236,001 - $246,000 | Partial deduction |
| Over $246,000 | No deduction |
Non-Deductible Contributions
Even if you cannot deduct, you can still contribute. Benefits:
- Tax-deferred growth
- May enable Backdoor Roth conversion
- Better than taxable account for some
Important: Track non-deductible contributions on Form 8606 for proper tax treatment later.
Traditional IRA vs. Roth IRA
The Traditional vs. Roth decision is one of the most important retirement planning choices.
Key Differences
| Feature | Traditional IRA | Roth IRA |
|---|---|---|
| Tax on Contributions | Deductible (usually) | Not deductible |
| Tax on Growth | Tax-deferred | Tax-free |
| Tax on Withdrawals | Taxed as income | Tax-free |
| RMDs | Required at 73 | None during owner lifetime |
| Income Limits | None for contributions (deduction limits apply) | Yes, for contributions |
| Early Access | 10% penalty + taxes | Contributions anytime, tax/penalty free |
When Traditional IRA is Better
- You can deduct contributions and are in a high tax bracket now
- You expect to be in a lower tax bracket in retirement
- You need the current tax deduction
- You are over Roth income limits
- You want to reduce current AGI
When Roth IRA is Better
- You are in a low tax bracket now (early career)
- You expect higher taxes in retirement
- You want tax-free withdrawals for flexibility
- You want to avoid RMDs
- You want to leave tax-free money to heirs
The Math Example
Traditional IRA: $7,000 contribution, 25% bracket
- Tax savings now: $1,750
- After 30 years at 7%: ~$53,300
- Withdrawal taxed at 22%: $41,574 after tax
Roth IRA: $7,000 contribution (after-tax)
- Tax savings now: $0
- After 30 years at 7%: ~$53,300
- Tax-free withdrawal: $53,300
Result: If tax bracket drops in retirement, Traditional wins. If it rises, Roth wins.
Compare scenarios with our Roth IRA Calculator.
Traditional IRA Withdrawal Rules
Understanding withdrawal rules helps you avoid penalties and plan distributions.
Regular Withdrawals (After 59½)
- Taxed as ordinary income
- No penalties
- Add to your AGI for the year
- May affect Social Security taxation and Medicare premiums
Early Withdrawals (Before 59½)
- Taxed as ordinary income PLUS
- 10% early withdrawal penalty
- Exceptions exist (see below)
Penalty-Free Early Withdrawals
| Exception | Requirements |
|---|---|
| First home purchase | Up to $10,000 lifetime |
| Higher education | For you, spouse, child, grandchild |
| Medical expenses | Exceeding 7.5% of AGI |
| Health insurance | If unemployed |
| Disability | Permanent and total |
| Substantially equal payments | 72(t) distributions |
| IRS levy | To pay back taxes |
| Birth or adoption | Up to $5,000 |
| Disaster distributions | FEMA-declared disasters |
Note: You still owe income tax on these withdrawals; only the 10% penalty is waived.
Required Minimum Distributions (RMDs)
Starting at age 73 (under SECURE Act 2.0):
- Must withdraw minimum amount annually
- Based on account balance and life expectancy
- Failure to withdraw: 25% penalty on shortfall
- Cannot avoid by keeping money in account
Use our RMD Calculator to determine required distributions.
Traditional IRA Investment Strategies
How you invest within your Traditional IRA significantly impacts growth.
Asset Allocation by Age
| Age | Stocks | Bonds | Cash |
|---|---|---|---|
| 20s | 90% | 10% | 0% |
| 30s | 80% | 20% | 0% |
| 40s | 70% | 25% | 5% |
| 50s | 60% | 35% | 5% |
| 60s | 50% | 40% | 10% |
| 70s | 40% | 50% | 10% |
Investment Options
Index Funds:
- Low fees (0.03-0.20%)
- Broad diversification
- Passive management
- Best for most investors
Target-Date Funds:
- Automatic rebalancing
- Becomes conservative over time
- One-fund solution
- Higher fees than index funds
Individual Stocks:
- Higher risk/reward
- Requires research and monitoring
- Tax-efficient in IRA (no capital gains)
- Not recommended for most
Tax-Efficient Placement
Since Traditional IRA withdrawals are taxed as ordinary income, place these assets inside:
- Bonds and bond funds
- REITs (real estate investment trusts)
- High-turnover funds
- Dividend-paying stocks
Place these in taxable accounts for favorable capital gains treatment:
- Long-term stock holdings
- Index funds
- Tax-managed funds
Rebalancing
Review and rebalance annually:
- No tax consequences inside IRA
- Maintain target allocation
- Sell high, buy low automatically
Contribution Strategies
Maximize your Traditional IRA with smart contribution strategies.
Max Out Contributions
| Year | Under 50 | 50 and Over |
|---|---|---|
| 2026 | $7,000 | $8,000 |
Monthly: $583.33 ($666.67 if 50+) Bi-weekly: $269.23 ($307.69 if 50+)
Timing Strategies
Lump Sum Early:
- Invest full amount January 1
- Maximum time in market
- Historically outperforms DCA
- Best if funds available
Dollar-Cost Averaging:
- Invest equal amounts monthly
- Reduces timing risk
- Matches most people`s cash flow
- Easier psychologically
Spousal IRA
Even if your spouse does not work:
- Can contribute to spousal IRA
- Same limits ($7,000/$8,000)
- Must file jointly
- Doubles household retirement savings
Catch-Up Contributions
At age 50+:
- Extra $1,000 allowed
- Adds significant growth potential
- 15 years of catch-up = $15,000 extra
- At 7% for 15 years: ~$25,000 additional
Prior-Year Contributions
You can make contributions for the prior year until tax filing deadline:
- 2025 contribution: January 1, 2025 - April 15, 2026
- Specify which year when contributing
- Useful for last-minute tax deduction
Converting to Roth IRA
Converting your Traditional IRA to a Roth IRA may make sense in certain situations.
How Conversions Work
- Transfer funds from Traditional to Roth IRA
- Pay income tax on the converted amount
- Converted funds grow tax-free
- Withdrawals are tax-free in retirement
When to Consider Converting
Good Times to Convert:
- Low income years (job loss, sabbatical, early retirement)
- Market downturns (convert more shares at lower value)
- Before tax rates increase
- Before RMDs begin
- When you have cash to pay the tax
Bad Times to Convert:
- High income years
- No cash to pay tax (do not pay from IRA)
- Need money within 5 years
- In highest tax bracket
Partial Conversions
You do not have to convert everything:
- Convert amount that fills current bracket
- Spread over multiple years
- Strategic bracket management
Example:
- 24% bracket ends at $191,950 (MFJ)
- Current taxable income: $150,000
- Convert up to $41,950 and stay in 24% bracket
The 5-Year Rule
For converted funds:
- Each conversion has its own 5-year clock
- Early withdrawal of converted amount: 10% penalty
- After 5 years: Penalty-free access
- After 59½: No restrictions
Pro-Rata Rule
If you have non-deductible (basis) contributions:
- Cannot convert only the basis
- Must calculate taxable portion
- All IRAs treated as one for this calculation
See our Roth Conversion Calculator for detailed analysis.
Pro Tips
- 💡Contribute early in the year to maximize tax-deferred growth.
- 💡Max out contributions every year if possible - you cannot make up missed years.
- 💡If you cannot deduct, consider a Roth IRA instead or use Backdoor Roth strategy.
- 💡Take advantage of catch-up contributions starting at age 50.
- 💡Use a spousal IRA to double household retirement savings.
- 💡Choose low-cost index funds to minimize fees eating into returns.
- 💡Rebalance annually to maintain your target asset allocation.
- 💡Consider Roth conversions in low-income years to reduce future tax burden.
- 💡Track non-deductible contributions on Form 8606 for proper tax treatment.
- 💡Plan for RMDs - they can push you into higher tax brackets.
- 💡Coordinate with 401(k) contributions for maximum tax-advantaged savings.
- 💡Review beneficiary designations periodically, especially after life changes.
Frequently Asked Questions
The contribution limit is $7,000 for those under 50 and $8,000 for those 50 and older (includes $1,000 catch-up contribution). This limit applies to your total contributions across all Traditional and Roth IRAs combined.
