🏦 Traditional IRA Calculator

Key concepts

The Traditional IRA is the original tax-deferred retirement account — deduct now, pay tax later. Every dollar you contribute to a Traditional IRA reduces your taxable income for that year (if you’re eligible to deduct — see the deduction phase-out paragraph below), and every dollar of growth and contribution compounds tax-free until you withdraw it in retirement, at which point it’s taxed as ordinary income at whatever your marginal rate is that year. The 2026 contribution limit is $7,000 (under age 50) or $8,000 (with the age-50 catch-up), making the maximum lifetime tax-deduction value for a high-bracket worker roughly $1,540-$2,560 per year (22%-32% of $7,000). The pot at retirement — assuming 35 years at 7% nominal returns and a flat $7,000 contribution — comes in around $968,000 of pre-tax value, which becomes $755,000 net of a 22% retirement tax. This calculator runs that math year-by-year and gives you the full breakdown.

The Traditional vs Roth IRA decision reduces to one question: will your marginal tax rate be higher today or in retirement? If higher today — peak-earnings years in your 30s-50s, dual-income household in a top federal bracket — Traditional wins. You take the deduction at 32% or 35% now, then withdraw in retirement at 12%-22% when your earned income is gone. If lower today — early-career low salary, gap year between jobs, sabbatical, retiree doing Roth conversions — Roth wins. Pay 12% federal tax on a $7,000 contribution now, get tax-free growth and tax-free withdrawals forever after. If your rates are roughly equal, the two accounts are mathematically identical: $7,000 deducted at 22% leaves you with the same after-tax retirement income as $7,000 × (1 − 22%) = $5,460 in a Roth growing at the same rate for the same horizon. The math is symmetric. The calculator above flags all three regimes with a plain-English recommendation, plus the dollar magnitude of the advantage.

The deduction phase-out catches high earners with workplace retirement plans. If neither you nor your spouse is covered by an employer retirement plan (401(k), 403(b), pension, SEP-IRA, etc.), your Traditional IRA contribution is fully deductible at any MAGI — no income limit. If you are covered, the deduction phases out between $77,000-$87,000 MAGI for a single filer and $123,000-$143,000 for married filing jointly in 2026. Above the upper threshold the contribution is still allowed but it’s fully nondeductible — you’re putting after-tax dollars into a pre-tax wrapper, which is almost always strictly worse than just contributing directly to a Roth (or doing the backdoor Roth dance if you’re also above the Roth income limit). The two most common high-earner mistakes are (1) making nondeductible contributions without filing Form 8606 to track basis, which means the IRS will tax you again on withdrawal, and (2) making nondeductible contributions and not immediately converting to Roth, leaving them to grow tax-deferred for years with worse tax treatment than a brokerage account.

RMDs start at age 73 and force a tax bill whether you want one or not. Required Minimum Distributions from a Traditional IRA begin at age 73 under SECURE 2.0 (rising to 75 in 2033 for anyone born 1960 or later). The first RMD must be taken by April 1 of the year after you turn 73, every subsequent RMD by December 31. The amount is your prior-year-end balance divided by the IRS Uniform Lifetime Table divisor — roughly 3.65% at 73, rising to 4.55% at 80, 6.76% at 90. RMDs are forced taxable events and there’s no escape: missing one triggers a 25% excise tax (down from 50% pre-SECURE 2.0). The strategic implication is that very large Traditional balances at retirement can push you into higher tax brackets via mandatory withdrawals, which is one of the strongest arguments for diversifying into Roth via conversions in your 60s and early 70s — the “Roth conversion ladder” that the FIRE community has popularised. Roth IRAs have no RMDs during the original owner’s lifetime, which is one of their major structural advantages, especially for legacy planning.

The backdoor Roth is a workaround for high earners blocked from direct Roth contributions. Direct Roth IRA contributions phase out at MAGI of $161,000 (single) or $240,000 (MFJ) for 2026, which excludes most dual-income professionals. The backdoor: contribute $7,000 nondeductibly to a Traditional IRA (no income limit on contributions, just on the deduction) and then immediately convert it to a Roth. Because the contribution wasn’t deducted, the conversion has zero or near-zero taxable amount — you’ve effectively made a Roth contribution the income limits would have blocked. The catch is the pro-rata rule: the IRS treats all your Traditional IRA balances as one pool when computing the taxable portion of any conversion. If you have $93,000 of pre-tax Traditional money plus $7,000 of fresh nondeductible contribution, 93% of any conversion is taxable. The fix: roll your pre-tax Traditional balances into your current 401(k) first (401(k) balances are excluded from the pro-rata calc), then keep the Traditional IRA empty except for fresh nondeductible contributions you immediately convert. Not every 401(k) accepts incoming rollovers, so check before relying on the strategy.

Three common Traditional IRA mistakes and how to avoid them. First, contributing more than the limit — the 2026 cap is $7,000 / $8,000 across all your IRAs combined, not per account. Over-contributing triggers a 6% excise tax on the excess every year until removed. Second, doing nondeductible contributions and forgetting to file Form 8606 — without the form the IRS has no record of your basis and will tax the same dollars again on withdrawal. The Form 8606 history is critical for backdoor Roth practitioners and high earners who’ve drifted in and out of the deduction phase-out. Third, raiding the Traditional IRA before 59½ for non-qualified reasons — the 10% early-withdrawal penalty stacks on top of ordinary income tax, making the effective tax rate 32%-50%+ in most brackets. If you genuinely need pre-59½ access, use the 72(t) Substantially Equal Periodic Payments route or build a Roth conversion ladder in the years before you need the money. Both sidestep the penalty entirely.