A Traditional IRA accepts pre-tax contributions (if deductible) that grow tax-deferred until withdrawal in retirement, when they are taxed as ordinary income.
Quick answer. A Traditional IRA accepts pre-tax contributions (if deductible) that grow tax-deferred until withdrawal in retirement, when they are taxed as ordinary income.
Interactive calculator
Traditional IRA calculator
Pre-tax contributions grow tax-deferred until withdrawal.
Projected balance-
Total contributed-
Growth-
Lifetime tax savings (estimated)-
How is this calculated?
FV = balance * (1+r)^t + PMT * ((1+r)^t - 1) / r
Tax savings approximates the value of either (a) up-front deductions (Traditional / RRSP / FHSA) or (b) tax-free growth (Roth / TFSA / ISA) relative to a taxable account.
About this tool
The Traditional IRA calculator projects the future value of pre tax contributions held in an Individual Retirement Account, the US tax deferred retirement vehicle available to any worker with earned income. Deductible contributions reduce taxable income today, every dollar of growth compounds untaxed inside the account, and withdrawals are taxed as ordinary income when you pull them out in retirement.
For 2026 the IRS contribution limit is 7,000 USD for filers under 50 and 8,000 USD for filers age 50 and older (the 1,000 USD catch up is now indexed). The limit applies across all your IRAs combined, not per account. Deductibility hinges on whether you or your spouse is covered by a workplace plan and on your modified adjusted gross income.
PMT = annual contribution, up to 7,000 USD (or 8,000 USD if 50+).
r = expected annual real return after inflation.
n = years until withdrawal.
Current marginal rate = top federal bracket on the contribution dollar; add state tax for the full deduction value.
Retirement marginal rate = expected effective rate on RMDs and discretionary withdrawals.
Worked example
A 32 year old saver in the 24 percent federal bracket plus 5 percent state contributes the full 7,000 USD for 30 years and earns a 6 percent real return. Expected retirement effective rate is 18 percent (lower because Social Security replaces some earned income and the standard deduction shelters the first slab):
Annual contribution: 7,000 USD.
Annual tax saved on the deduction: 7,000 x 0.29 = 2,030 USD (federal plus state).
Growth of the annuity stream: 7,000 x ((1.06^30 - 1) / 0.06) = 553,386 USD pre tax.
After tax retirement value (18 percent effective): 553,386 x 0.82 = 453,776 USD.
Bracket arbitrage: (29 percent - 18 percent) x 7,000 = 770 USD per year in real tax savings.
Result: The same 7,000 USD contribution delivers about 453,776 USD of after tax retirement spending, plus 30 years of front loaded tax refunds totaling roughly 60,900 USD. Reinvesting those refunds in a brokerage account adds another 100,000 USD or so by retirement, depending on capital gains exposure.
2026 Traditional IRA key numbers
Rule
2026 value
Base contribution limit
7,000 USD
Age 50+ catch up
1,000 USD (total 8,000 USD)
Deduction phase out (single, covered)
79,000 to 89,000 USD MAGI
Deduction phase out (MFJ, both covered)
126,000 to 146,000 USD MAGI
Spouse covered, you are not (MFJ)
236,000 to 246,000 USD MAGI
Early withdrawal penalty (under 59.5)
10 percent plus ordinary income tax
RMD start age
73 (rising to 75 in 2033)
Common mistakes
Contributing in a low bracket year. A 12 percent deduction is wasted if your retirement effective rate is 22 percent. Roth IRA usually wins in that case.
Holding bond ETFs in a Roth and stocks in the Traditional. Asset location should normally place high growth assets in the Roth (tax free forever) and bonds in the Traditional (lower future tax bill on slower growth).
Forgetting the pro rata rule on backdoor Roth conversions. Any pre tax IRA balance pollutes the basis calculation, making backdoor conversions partly taxable.
Missing an RMD after age 73. The penalty is 25 percent of the shortfall (10 percent if corrected within two years). Set a calendar reminder for December 1 of each year.
Cashing out at job change. A 50,000 USD pre 59.5 cash out in the 32 percent bracket nets about 29,000 USD after federal tax and penalty. Direct rollover to your new 401(k) or an IRA preserves the entire balance.
Ignoring the spousal IRA. A non earning spouse can contribute 7,000 USD as long as the working spouse has at least that much earned income. Many couples skip this room.
If neither you nor your spouse is covered by a workplace retirement plan, the full 7,000 USD (8,000 USD if age 50+) is deductible at any income. If you are covered, deductibility phases out between 79,000 and 89,000 USD modified AGI for single filers and 126,000 to 146,000 USD for married filing jointly in 2026.
What happens if I withdraw from a Traditional IRA before age 59 and a half?+
A 10 percent federal early withdrawal penalty plus ordinary income tax applies. Exceptions include a 10,000 USD first time home purchase, qualified higher education, total and permanent disability, unreimbursed medical above 7.5 percent of AGI, birth or adoption up to 5,000 USD, and substantially equal periodic payments under section 72(t).
Can I contribute to a Traditional IRA if I have a 401(k)?+
Yes. The 7,000 USD IRA limit is separate from the 23,500 USD 401(k) limit, so you can fully fund both. Deductibility of the IRA contribution phases out at the income thresholds above when you or your spouse is covered by a workplace plan, but you can still contribute and treat the amount as nondeductible basis.
When do Required Minimum Distributions start?+
At age 73 under current law, rising to 75 in 2033. The first RMD can be deferred to April 1 of the year after you turn 73, but doing so stacks two RMDs into one tax year. The penalty for missing an RMD is 25 percent of the shortfall (10 percent if corrected within two years).
Sources
IRS Publication 590-A, Contributions to Individual Retirement Arrangements, 2026 edition.
IRS Notice 2025-XX, 2026 cost of living adjustments for retirement plans.
SECURE 2.0 Act of 2022, RMD age and catch up indexation provisions.
Internal Revenue Code section 72(t) exceptions to the early withdrawal penalty.
