A Traditional IRA is the original pre-tax retirement account: money goes in before you pay income tax, grows tax-deferred for decades, and is taxed as ordinary income when you pull it out in retirement. The trade-off is simple — you get a deduction on this year's Form 1040 in exchange for agreeing to pay the IRS later. This calculator shows both sides of that trade-off side by side: the upfront tax break you get every year you contribute, the future balance you build by age 73, the first Required Minimum Distribution (RMD) the IRS forces you to take, and the after-tax nest egg you actually get to spend.
Unlike a Roth IRA, where contributions are after-tax and withdrawals are tax-free, a Traditional IRA lets you lower your taxable income today. If you expect to be in a lower tax bracket in retirement than you are now, the Traditional route usually wins; if you expect higher taxes later, the Roth often does. Sliders on this page let you test both brackets at once.
How to Use
- Enter your Annual Traditional IRA Contribution. The 2025 statutory limit is $7,000 if you are under 50, plus a $1,000 catch-up at age 50 and over. You cannot deduct more than you earn in compensation for the year.
- Add your Current Traditional IRA Balance if you already hold pre-tax IRA dollars from old jobs or past years. Leave it at zero if you are starting fresh.
- Set your Expected Annual Return. A 7% long-run balanced-portfolio assumption is the common default; stress-test with 5% and 9% to see the range.
- Type your Current Age and choose your RMD Start Age (federal law defaults to 73, rising to 75 in 2033 under SECURE 2.0). The number of years between them is how long your money compounds.
- Enter your Marginal Tax Bracket Now — this year's top federal rate — to see the immediate dollar deduction on your 1040.
- Optionally set your Expected Tax Rate in Retirement. If you think your bracket will drop from 22% to 12% in retirement, type 12 here and compare the after-tax nest egg.
The result card shows the projected balance at RMD age, the split between your own contributions and tax-deferred growth, the upfront deduction this year and across your whole saving window, the first-year RMD, the estimated tax on that RMD, and the after-tax dollars you would keep.
The Traditional IRA Formula
The projected balance uses the future value of an annuity due, meaning each year's contribution is treated as deposited on January 1 and compounds for the full year:
FV = PV × (1 + r)ⁿ + PMT × ((1 + r)ⁿ − 1) / r × (1 + r)
Where PV is your current balance, r is the annual return, n is the number of years until RMD age, and PMT is your annual contribution. If r = 0 the formula divides by zero, so the engine simply adds contributions: FV = PV + PMT × n.
On the IRS Uniform Lifetime Table in effect since 2022, the distribution period at age 73 is 26.5 years, so the first RMD is balance ÷ 26.5. Worked example: a 43-year-old contributes $7,000 a year at a 7% return for 30 years. The starting balance is $0, n = 30, and (1.07)³⁰ ≈ 7.612. Plugging in gives a projected balance of about $707,511. At a 22% marginal bracket, each contribution saves $1,540 on that year's tax return. The first RMD at 73 is $707,511 ÷ 26.5 ≈ $26,699, which is itself taxed as ordinary income.
Why the Deduction Matters
The most underrated feature of a Traditional IRA is not the compounding — it is the refund you get the April after you contribute. A $7,000 contribution at a 22% bracket cuts your federal tax bill by $1,540 the same year, effectively reducing the out-of-pocket cost of that contribution to $5,460. Over 30 years, the cumulative upfront deduction is $46,200, and if you reinvest that refund into a taxable brokerage account or an emergency fund, the real advantage is even larger. The catch is that every dollar — your contributions, the tax you deferred, and all the growth — is eventually taxed at your ordinary income rate on the way out, starting with the RMD the IRS forces on you at 73.
Examples
Example 1 — The default saver. A 43-year-old single filer earns $95,000, puts $7,000 a year into a Traditional IRA, assumes a 7% return, and expects a 22% bracket both now and in retirement. The projected balance at 73 is roughly $707,511, the upfront deduction is $1,540 per year, and the first RMD is about $26,699, of which $5,874 goes to federal tax at 22%.
Example 2 — The high-bracket saver. A 52-year-old attorney in the 32% bracket starts with an existing $120,000 IRA balance, contributes the $8,000 limit (including the $1,000 catch-up) for 21 years to age 73, at 7%. The current balance compounds to about $489,000 on its own, and the annuity-due contributions add roughly $405,000 — a total near $894,000. The upfront deduction this year is $8,000 × 32% = $2,560, making the real cost of that contribution only $5,440.
Example 3 — The zero-return stress test. Same $7,000 annual contribution for 30 years but with a 0% return (worst-case flat market). The balance simply equals total contributions: $210,000, with no investment growth. The upfront deduction is still $1,540 a year, which is why even a low-return environment leaves the Traditional IRA ahead of a taxable account.
Example 4 — The seven-figure saver. A high earner maxes out at $1,000,000 a year (e.g. rolling a large bonus into a self-employed IRA) for 30 years at 7%. The projected balance crosses $101 million, and the first-year RMD alone is nearly $3.8 million — a reminder that RMDs on very large pre-tax balances can push you into a much higher bracket, which is why Roth conversions before 73 are worth modeling.
FAQ
What is the 2025 Traditional IRA contribution limit?
For 2025 the base limit is $7,000 for anyone under 50. If you are 50 or older, you get an extra $1,000 catch-up contribution for a total of $8,000. Your contribution cannot exceed your taxable compensation for the year (W-2 wages or self-employment earnings).
How much is my tax deduction worth?
The deduction equals your contribution multiplied by your marginal federal tax bracket. A $7,000 contribution at a 22% bracket saves $1,540; at a 24% bracket it saves $1,680; at a 32% bracket it saves $2,240. If you are covered by a workplace retirement plan (401(k), 403(b)), the deduction phases out at higher incomes — for 2025, single filers covered by a plan see the deduction phase out between roughly $79,000 and $89,000 of MAGI.
When do I have to start taking RMDs?
Under SECURE 2.0, Required Minimum Distributions begin at age 73 for anyone born between 1951 and 1959, and at age 75 for anyone born in 1960 or later. The first RMD for the 43-year-old in the default case arrives at 73. If you miss an RMD, the federal excise tax is 25% of the shortfall (10% if you correct it on time).
How is the first-year RMD calculated?
Divide your IRA balance as of December 31 of the prior year by the IRS Uniform Lifetime Table distribution factor. At age 73 the factor is 26.5, so a $707,511 balance produces a first RMD of $26,699. At age 75 the factor drops to 24.6, and at 80 it is 20.2 — meaning the percentage you must withdraw rises as you get older.
Should I choose a Traditional IRA or a Roth IRA?
Pick Traditional if your current tax bracket is higher than the one you expect in retirement, or if you need the upfront deduction to make room in your budget. Pick Roth if you are early in your career in a low bracket, expect much higher taxes later, or value the flexibility of no RMDs. Many savers split the difference with both accounts. This calculator shows the Traditional side; use the Roth IRA calculator on this site to compare.
Can I deduct a Traditional IRA contribution if I have a 401(k)?
Yes, but partially. If you or your spouse are covered by a workplace plan, the deduction phases out above a MAGI threshold. For 2025, single filers covered by a plan see the deduction vanish between about $79,000 and $89,000; married filing jointly between $123,000 and $143,000. If you are not covered by a plan but your spouse is, a higher phase-out applies.
What happens if I withdraw money before age 59½?
Withdrawals before 59½ are taxed as ordinary income and usually hit a 10% additional early-withdrawal penalty. There are exceptions — first-time home purchase (up to $10,000 lifetime), higher education expenses, unreimbursed medical costs above 7.5% of AGI, disability, and substantially equal periodic payments under IRS Rule 72(t).
Disclaimer
This Traditional IRA calculator is provided for informational purposes only and does not constitute tax, legal, investment, or financial advice. Projected balances use an annuity-due formula with your assumed return; actual investment returns vary and are not guaranteed. RMD factors follow the IRS Uniform Lifetime Table in effect in 2025 and may change. Contribution limits, phase-out ranges, and tax brackets are current as of the 2025 tax year. Always confirm your deduction eligibility, contribution limits, and RMD planning with a qualified tax professional or CPA before filing or withdrawing.