Which will provide the most retirement income?
Inputs Next Steps

Your annual contributions
Amount to contribute

Your plans and assumptions
Federal + state tax rate - before retirement
Federal + state tax rate - after retirement
Your current age
Age to begin withdrawing
Age at death
Funds you wish to leave at death
Estimated rate of return on IRA
Estimated return on other assets

This tool compares the returns of the following four investment alternatives and provides a summary of lump sum amount received at retirement and monthly retirement income: a traditional IRA, Roth IRA, nondeductible IRA, and depositing into a taxable account.

Key assumptions of this tool include:
  • If contributions are invested before or after taxes and the amount exceeds the maximum allowed, the contribution is first maximized into the IRAs. The remaining amount is assumed to be deposited in a taxable savings account. The scenario where contributions are invested without regard to taxes does not have a savings account.
  • For IRAs, deductible contributions are based on the amount of your modified adjusted gross income (MAGI), tax-filing status, and whether you or a spouse participates in a qualified employer-sponsored retirement plan.
  • Deposits are compounded monthly
Deductible IRA: A deductible IRA is an individual retirement account that is funded with tax-deductible contributions. You can contribute up to either $5,500 or $6,500 (depending on age, income, and participation in an employer-sponsored retirement plan) in 2014.
Roth IRA: A tax-advantaged retirement account that allows you to make an after-tax contribution of up to $5,500 for 2014, or up to $6,500 if you're age 50 or older. If you keep a Roth IRA for at least five years and are at least age 59-1/2 when you begin to withdraw from the account, the entire account may be distributed tax- and penalty-free.
Regular IRA: A regular IRA is also called a traditional IRA. It is a tax-deferred retirement account. For 2014, you are allowed to make a tax-deferred contribution of $5,500 to a regular IRA. This account grows tax-deferred until you begin to take distributions, which you may do after you turn age 59-1/2. For persons who are age 50 or older, a special catch-up provision of the 2001 tax law allows you to contribute an additional $1,000, or a total of $6,500. You are required to begin taking distributions from a regular IRA every year after reaching age 70-1/2 according to a schedule that is based on your age and the corresponding distribution period specified in the Life Expectancy Tables. (See Appendix C of IRS Pub. 590: Life Expectancy Tables.)
Taxable account: An account that does not receive the tax breaks that either a tax-exempt account or tax-deferred account are eligible to receive.
Modified adjusted gross income (MAGI): A measure of income used to determine how much of a tax-deductible contribution you may make to a traditional IRA or nondeductible contribution to a Roth IRA.
Lump sum before taxes: The cumulative value of your individual retirement accounts (IRAs) and any taxable investments before income taxes. Investments held in other retirement accounts, such as a 401(k) plan, are ignored.
Catch-up provision for contributions to individual retirement accounts: The Economic Growth and Tax Relief Reconciliation Act of 2001 authorized higher yearly contribution limits to IRAs, 401(k) plans and other defined-contribution retirement plans. A catch-up provision of the new law authorized even higher limits for workers who are age 50 or older. For regular and Roth IRAs, this additional contribution amount is $1,000 for 2014. As a result, combined yearly contribution limits for persons aged 50 or older increase to $6,500 for 2014.
Nondeductible IRA: An individual retirement account whose contributions are either partially or fully funded with contributions that are not tax-deductible. You can contribute up to either $5,500 or $6,500 (depending on age, income limits and participation in an employer-sponsored retirement plan) in 2014. A nondeductible IRA benefits from tax-deferred compounded growth.
Monthly retirement income (IRAs): The amount of monthly income, after taxes, that you can expect from your individual retirement accounts.
Leadfusion CALCULATORS: Roth IRA Email Results

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The calculators are provided by a third party service provider, Leadfusion, Inc. The figures entered on the input page of this calculator are for hypothetical purposes only. You should enter figures that are appropriate to your individual situation. The results provided by this calculator are also intended for illustrative purposes only and accuracy is not guaranteed by Northwestern Mutual. This calculator is not intended to offer any tax, legal, financial or investment advice and does not assure the availability of or your eligibility for any specific product offered by Northwestern Mutual, its affiliates or any other institution, nor does this calculator predict or guarantee the actual results of any investment product. The terms and conditions of products offered by institutions will differ and may affect the results of the calculator. Please consult with qualified professionals to discuss your situation.

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