NestEgg

Traditional IRA Calculator

Contributions may be tax-deductible today, with growth deferred until you withdraw in retirement.

Initial deposit

Monthly contribution

Expected annual return

Years to grow: 20

Growth over time

What you entered

Initial deposit: $1,000Monthly contribution: $300Expected return: 7%/yrYears: 20

1
Total months to compound
n = 20 years × 12= 240 months
2
Monthly return rate
r = 7% ÷ 12= 0.5833%
3
Compound monthly, adding your deposit each time
balance = balance × (1 + r) + $300.00, starting from $1,000.00, repeated 240×= $160,316.74
4
Total you contributed (not counting interest)
$1,000.00 + $300.00 × 240 months= $73,000.00
5
Interest earned
$160,316.74 − $73,000.00 contributed= $87,316.74

Result

Final balance: $160,317

Of your $160,317 final balance, $73,000 came from your own deposits and $87,317 came from compound interest — compounding did roughly 120% of the work your contributions did.

Traditional IRA balance from regular monthly contributions at 7%

Each cell starts from zero and contributes the monthly amount shown, compounding at 7% a year. These are pre-tax balances: withdrawals in retirement are taxed as ordinary income.

Monthly contribution	After 10 years	After 20 years	After 30 years	After 40 years	Contributed over 30 years
$100	$17,308	$52,093	$121,997	$262,481	$36,000
$250	$43,271	$130,232	$304,993	$656,203	$90,000
$500	$86,542	$260,463	$609,985	$1,312,407	$180,000
$1,000	$173,085	$520,927	$1,219,971	$2,624,813	$360,000
$1,500	$259,627	$781,390	$1,829,956	$3,937,220	$540,000
$2,000	$346,170	$1,041,853	$2,439,942	$5,249,627	$720,000

Read every figure here as before tax, which is the key difference from a Roth. A $609,985 balance taxed at 22% in retirement is about $475,788 spendable, and at 24% about $463,589. In exchange, deductible contributions reduce your taxable income now, which is why a traditional IRA generally suits people whose marginal rate today is higher than they expect in retirement. Deductibility phases out at higher incomes if you or a spouse have a workplace plan. Required minimum distributions eventually force withdrawals whether you need the money or not, and withdrawals before 59 and a half are normally penalised on top of income tax. Limits change periodically - confirm the current year's before projecting.

Tax-deferred, not tax-free

Unlike a Roth, a Traditional IRA's growth isn't tax-free — it's tax-deferred. You'll owe ordinary income tax on withdrawals in retirement, so the balance shown here is a pre-tax figure, not what you'll actually get to spend.

Deductibility can depend on other factors

Whether your contribution is tax-deductible today can depend on your income and whether you (or a spouse) are covered by a workplace retirement plan — deductibility isn't automatic for every filer.

Required Minimum Distributions (RMDs)

Starting at age 73 (under SECURE 2.0), you must take annual withdrawals from a Traditional IRA whether you need the money or not. The amount is based on your balance and IRS life expectancy tables. Missing an RMD triggers a 25% penalty on the amount not withdrawn (reduced from 50% by SECURE 2.0).

Frequently asked questions

How much can I contribute to a Traditional IRA?

$7,000 per year in 2024 ($8,000 if age 50+). Unlike Roth IRAs, there's no income limit to contribute — but deductibility phases out if you or your spouse have a workplace plan. Single filers: deduction phases out at $77,000–$87,000 MAGI. Married filing jointly: $123,000–$143,000.

Traditional IRA vs. Roth IRA — which is better?

Traditional IRA gives you a tax break now (deduction) but taxes withdrawals later. Roth IRA gives no deduction but tax-free withdrawals. Traditional wins if your current tax rate is higher than your expected retirement rate. Roth wins if you expect to be in the same or higher bracket. When in doubt, diversify across both.

What are the penalties for early withdrawal?

Withdrawals before age 59½ owe income tax plus a 10% early withdrawal penalty. Exceptions: first-time home purchase (up to $10,000), qualified education expenses, disability, and substantially equal periodic payments (72(t) distributions). After 59½, you pay income tax only — no penalty.