Bishop Street Funds - IRA vs. Roth IRA Calculator




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If you're looking to begin a new IRA but aren't sure if a Traditional IRA or a Roth IRA would be better for you, our IRA calculator can help you pinpoint where your best opportunity lies.

Before you begin, you should understand some important distinctions between the Traditional and Roth IRAs:

The Roth IRA does not permit you to deduct your contributions from your income at tax time, but you pay no taxes on your earnings, provided you do not withdraw them before you are 59 1/2 years of age and your Roth IRA has been established for at least 5 years.

You can contribute to a Roth IRA regardless of whether you are also covered by an employer-sponsored plan, and you are not required to begin taking distributions at age 70 1/2.

It's very important to remember that this calculator represents a general, hypothetical planning tool and is not a substitute for the advice of a qualified legal, accounting, or investment adviser. Talk with your Bishop Street Funds investment professional and/or your tax adviser to review in more depth your specific situation and confirm the results of this calculation.

Which IRA Is Best?

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This calculator will figure the after-tax value of your investments in different IRA accounts at age 59 1/2, assuming you make $3,000 annual contributions up until age 50, and $3,500 annual contributions after that. For the tax-deductible IRA, we assume you invest your tax savings each year and earn the same return as on your IRA. However, we tax those returns annually as income.

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