Traditional IRA Calculator
Estimate tax-deferred investment accumulation and retirement nest egg in a Traditional IRA account with 2026 contribution and deduction limits.
Traditional IRA Projection
2026 IRS limit: $7,500 a year, or $8,600 at age 50 and over.
Deduction now versus tax-free growth later
A traditional IRA gives you the deduction up front. Contributions may reduce this year's taxable income, the balance grows untaxed, and income tax falls due on every withdrawal in retirement. The effect is to defer tax rather than avoid it — which is genuinely valuable, because money that would have gone to tax stays invested and compounds for decades.
Whether you actually get the deduction depends on circumstances. If neither you nor a spouse is covered by a workplace retirement plan, the contribution is generally fully deductible. If one of you is covered, the deduction phases out over an income range that is adjusted most years. Above it you can still contribute — the money simply goes in without a deduction, which is worth tracking carefully as basis so you are not taxed on it twice at withdrawal.
Two timing rules shape the account. Withdrawals before age 59½ generally attract a 10% penalty on top of income tax, with carve-outs for things like a first home, higher education and certain medical costs. And required minimum distributions eventually force money out whether you need it or not, which is the main structural argument for holding some Roth money alongside — it gives you a pot the RMD rules cannot reach.
Frequently asked questions
How does a Traditional IRA work?
Traditional IRA contributions are often tax-deductible when made, and investments grow tax-deferred until withdrawals in retirement.
What are the IRA contribution limits?
For 2026, $7,500 per year with an additional $1,100 catch-up contribution from age 50, across all your traditional and Roth IRAs combined. Limits are indexed and change periodically, and Roth eligibility phases out above certain income levels - check the current IRS figures before relying on any number.
Should I choose a traditional or Roth IRA?
Traditional gives a deduction now and taxes withdrawals later; Roth is funded with after-tax money and withdrawals are tax-free. The deciding question is whether your tax rate in retirement will be higher or lower than today. Roth also has no required minimum distributions, which makes it more flexible for estate planning.
Can I withdraw from an IRA before 59 and a half?
Generally with a 10% penalty plus income tax, though exceptions exist for first-time home purchase (up to $10,000), qualified education, substantial medical expenses, disability and substantially equal periodic payments. Roth contributions - though not earnings - can always be withdrawn tax and penalty free, since they were taxed going in.