- Current age
- Your current age.
- Annual contribution
- The amount you will contribute to an IRA each year. This calculator assumes that you make your contribution at the beginning of each year. In 2003, the maximum IRA annual contribution is $3,000 per individual. It is important to note that this is the maximum total contributed to all of your IRA accounts. This maximum will increase gradually to $5,000 by 2008. The table below summarizes IRA annual contribution limits.
|Year||IRA contribution limit|
|2008 and after*||$5,000|
*Beginning in 2009, the contribution limit will adjust annually for inflation in $500 increments
If you are 50 or older you can make additional "catch-up" contributions of $500 more than the normal limits in 2002 through 2005. Starting in 2006, the "catch-up" amount will increase to $1,000. In order to qualify for the "catch-up" contribution, you must turn 50 by the end of the year in which you are making the contribution.
It is important to note that Roth IRA contributions are limited for higher incomes. If your income falls in a "phase-out" range you are allowed only a prorated Roth IRA contribution. If your income exceeds the phase-out range, you do not qualify for any Roth IRA contribution. For the purposes of this calculator, we assume that your income does not limit your ability to contribute to a Roth IRA. The table below summarizes the income "phase-out" ranges for Roth IRAs.
|Tax filing status||Income Phase-Out Range|
|Married filing jointly or Head of household||$150,000 to $160,000|
$95,000 to $110,000|
|Married filing separately||$0 to $10,000|
- Expected rate of return
- The annual rate of return for your IRA. This calculator assumes that your return is compounded annually and your contributions are made at the beginning of each year. The actual rate of return is largely dependant on the type of investments you select. For example, from January 1970 to February 2003 the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11%. Savings accounts at a bank pay as little as 2% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volitility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year you retire you do not make any contributions to your IRA. So if you retire at age 65, your last contribution happened when you were actually 64.
- Current tax rate
- The current marginal income tax rate you expect to pay on your taxable investments.
- Retirement tax rate
- The marginal tax rate you expect to pay on your investments at retirement.
- Adjusted gross income
- Your adjusted gross income from your taxes. This is used to calculate whether you are able to deduct your annual contributions from your income tax statement.
- Are you married?
- Check the box if you are married. This is used to determine whether you can deduct your annual contributions from your taxes.
- Employer plan?
- Check the box if you have an employer sponsored retirement plan, such as a 401k or pension. This is used to determine if you can deduct your annual contributions from your taxes.
- Total non-deductible contributions
- The total of your Traditional IRA contributions that were deposited without a tax deduction. Traditional IRA contributions are normally tax-deductible. However, if you have an employer sponsored retirement plan, such as a 401(k), your tax deduction may be limited.
In 2003, for single tax filers with an employer sponsored retirement plan, an IRA contribution is fully tax-deductible if your income is below $40,000. It is then prorated between $40,000 and $50,000. If your income is over $50,000 and you have a employer sponsored retirement plan such as a 401(k) you receive no tax deduction. For married couples the same rules apply except the deduction is phased out between 60,000 and $70,000. The phase-out ranges are scheduled to increase over the next few years. The table below summarizes the deduction phase-out for 2002 - 2007.
Traditional IRA Deduction Income Phase-Out Ranges
|Year||Single Taxpayers||Married Taxpayers Filing Jointly|
This calculator automatically determines if your tax deduction is limited by your income. However, there are two unusual situations not automatically accounted for where additional tax phase-outs are applied. First, if your spouse has an employer sponsored retirement plan but you do not, your tax deduction is phased out from $150,000 to $160,000. Second, if you are married filing separately and have a employer sponsored retirement plan, the income phase-out is from $0 to $10,000.
- Total contributions
- The total amount contributed to your IRA.
- IRA total after taxes
- For the Roth IRA this is the total value of the account. For the Traditional IRA this the sum of two parts: 1) The value of the account after you pay income taxes on all earnings and tax-deductible contributions and 2) what you would have earned if you had invested (in an ordinary taxable account) any income tax savings.