How to Calculate a Roth Ira Account


A Roth IRA account is a tax-free retirement investment savings account; the Roth IRA also protects all earnings incurred on the account to be sheltered or free from tax deductions. A Roth IRA is a tax-free growth account that will prove to be a great future investment for the retirement. Calculating your Roth IRA account to determine your expected rate of return requires plugging in key information as it relates to your yearly IRA account contributions.

  • Check your Roth IRA account to locate your current balance.

  • Enter your current age. This information is needed to properly determine the amount of your annual contributions.

  • Enter your appropriate expected rate of return. For example, if your expected rate of return is 8.5 percent, then that is the figure you will enter into the Roth IRA savings calculator. If you are unsure of what your expected rate of return should be, contact your investment adviser to retrieve that information for proper calculations. Keep in mind that is not possible to make future predictions with firm confidence regarding return rates, and those investments with higher return rates are subject to higher risk.

  • Review the calculations for the total contributions.

  • Locate your annual Roth IRA account contribution information; there is a maximum allowable annual contribution amount for each individual. In 2008 the maximum contribution per individual was set at $5,000.

  • Enter your marginal tax information; this is the taxable amount you anticipate paying on your investments.

  • Decide on the age you expect to retire, and enter that information into the Roth IRA savings calculator.

  • Review the Roth IRA savings calculations for your anticipated retirement balance. If the calculations seem to be incorrect, then start the process over to get a better estimated balance of your Roth IRA retirement account calculations.

Tips & Warnings

  • Save the information that you received from calculating your Roth IRA account; this information can be helpful for a later date.
  • Remember that Roth IRA contributions are limited for those with higher incomes.
  • Be sure to validate your qualifications for obtaining a Roth IRA account.
  • Always inquire about the fees and sales commission your investor charges.
  • Be aware of the risk involved as an investor.

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