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With a Roth IRA (Individual Retirement Agreement) you pay tax on your contributions, but withdraw the funds tax-free in retirement. You can specify your annual contribution either before or after tax.

**Note**: you can also specify a figure on maturity to see how much you need to contribute annually (to do this either enter all details except the Annual Contribution, or simply amend the Maturity amount once calculated).

We all make retirement plans in a way that will help us at the time when our regular income stops. Wouldn't it be better if we get those funds that we have saved up with years of hard work, tax free. IRAs can be helpful in retirement planning. Sure, there are risks involved. But when we can afford to take some risks and have time and money to spare then why not do it, for a better future.

ROTH IRA was named after a former Delaware (U.S.) senator. It was established in the year 1977. These accounts are similar to traditional IRAs. The main difference between the two is the way tax is charged. ROTH IRA contributions are made with after tax money, that makes the distributions at the time of retirement, tax free.

ROTH IRAs are generally the retirement accounts that hold your investments in the form of stocks, bonds & mutual funds. Other types of investments like certificates of deposits, derivatives, notes and even real estate are possible. The growth in ROTH IRAs are tax free as well. The tax-free distributions and growth makes it quite popular among various retirement plans.

Other than provided tax benefits ROTH IRA is quite useful when it comes to sources of investment permitted, including:

**Regular contributions**- These contributions are done in cash or checks, they can not be in the form of asset of securities.**Rollover contributions**- This refers to redeposit of the amount that was already distributed from the retirement account. This has a limit of one redeposit in a year**Combine ROTH IRA**- An individual can combine ROTH IRA with his/her spouse in case of death of the other partner. This is because in case of death of one partner the other spouse becomes sole beneficiary of ROTH IRA owned by his/her spouse.**Transfers**- Here, the amount from another retirement plans, ( i.e. retirement plans from employers) can be transferred directly to a ROTH IRA.**Conversions**- It means that assets from other retirement funds i.e. traditional IRA can be converted into ROTH IRAs.**Spousal IRA contributions**- It is possible for non-working individuals to have a ROTH IRA where spouse of the non-working individual can contribute on their behalf. There is no provision of "must have earned income" to contribute to an IRA.**Saving on Future tax**- Since ROTH IRA contributions are post tax, the distributions are tax free. This evades the risk of higher tax rates in future years.**Inheritance**- It is possible to pass on the owned assets to heirs in these accounts.**Mandatory distributions**- Unlike other retirement plans, it is not mandatory in ROTH IRA to get minimum amount of distributions. Minimum distribution rules will apply if the assets are passed on to heirs.

There are some disadvantages as well when you choose to plan your retirement with ROTH IRAs:

**Immediate tax savings**- ROTH IRAs are maintained with post tax income, which means not immediate tax savings unlike other retirement plans like traditions IRAs.**Income limits**- ROTH IRA contributions are subject to income limits, which makes employer sponsored retirement plans more attractive with no income limits.**Current income tax rate**- ROTH IRA holders may end up paying higher taxes. This is because people fall under lower income tax brackets during their retirement days in comparison to when they are working.**Realization of tax benefits**- There is a possibility that one may never realize the tax benefit gained with ROTH IRAs. This is because one may not live up to the age of retirement.

The ROTH IRA calculator is made to ease your burdens to plan for your retirement. You can use the calculator to know how much you can save for your retirement. The calculator works in different ways.

- You can check your annual contribution amount before and after tax. You just have to select the correct option from the drop down.
- You can check the maturity amount that you will save with the desired annual contribution amount.
- You can check the amount of annual contribution by entering the desired maturity amount.

Below are the details that are required to be entered to find out the results on calculator.

**Annual contribution**- Here you will enter the amount that you can comfortably invest annually.**Savings period**- The total number of years that you are planning on investing until retirement.**Rate of return**- Interest rate (as expected or offered by investment company or bank) that is payable annually.**Current tax rate**- Tax rate is required if the income value entered is before tax.**Maturity amount**- The total expected amount on maturity.**Result = Net amount**- As a result, here you will find the net amount you can expect to receive upon withdrawing your investments.- Yield To Maturity Calculator
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In addition to this result, you can also generate a table of payment schedule. This table will show you year on year progress on your investments that includes annual interest and balances.

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