| Definitions |
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| 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. |
| Current age: |
Your current age |
| 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 age 64.
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| Current tax rate: |
Your current marginal 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: |
What you anticipate your income to be. This is used to calculate whether you are able to deduct your annual contributions from your taxes. It is important to note that there are no income limits preventing you from contributing to a Traditional IRA. Annual income only affects your ability to make a tax deductible contribution.
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| Married: |
Check the box if you are married. This is used to determine whether you can deduct your annual contributions from your taxes.
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| Years until retirement: |
Number of years before retirement. |
| 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. For more information see the definition for non-deductible contributions, directly below, for more information on how an Employer plan can affects your IRA tax deduction.
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| 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. |
| Total contributions: |
The total amount contributed to this IRA. |
| IRA total before taxes: |
Total value of your IRA at retirement before taxes. |
| IRA total after taxes: |
Total value of your IRA at retirement after taxes are paid. |
| Total taxable account: |
Total value of your savings, at retirement, if the after tax contribution amount is deposited into a taxable account.
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