- Definitions
Current age
- Your current age.
- Annual contribution
- The amount you will contribute to an IRA each
year. This calculator assumes that you make your contribution at the
beginning of each year. In 2003, the maximum IRA annual contribution
is $3,000 per individual. It is important to note that this is the
maximum total contributed to all of your IRA accounts. This maximum
will increase gradually to $5,000 by 2008. The table below summarizes
IRA annual contribution limits.
| Year |
IRA
contribution limit |
| 2002-2004 |
$3,000 |
| 2005-2007 |
$4,000 |
| 2008
and after* |
$5,000 |
*Beginning in 2009, the contribution limit
will adjust annually for inflation in $500 increments
If you are 50 or older you can make
additional "catch-up" contributions of $500 more than the
normal limits in 2002 through 2005. Starting in 2006, the
"catch-up" amount will increase to $1,000. In order to
qualify for the "catch-up" contribution, you must turn 50 by
the end of the year in which you are making the contribution.
It is important to note that Roth IRA
contributions are limited for higher incomes. If your income falls in
a "phase-out" range you are allowed only a prorated Roth IRA
contribution. If your income exceeds the phase-out range, you do not
qualify for any Roth IRA contribution. For the purposes of this
calculator, we assume that your income does not limit your ability to
contribute to a Roth IRA. The table below summarizes the income
"phase-out" ranges for Roth IRAs.
| Tax
filing status |
Income
Phase-Out Range |
| Married
filing jointly or Head of household |
$150,000
to $160,000 |
| Single |
$95,000
to $110,000 |
| Married
filing separately |
$0
to $10,000 |
- Investment rate of return
- Rate of return on investments. This is the
return that you would make if you were to invest your down payment or
security deposit instead of using it in your auto purchase or lease.
The actual rate of return is largely
dependant on the type of investments you select. From January 1970 to
December 2004, the average compounded rate of return for the S&P
500, including reinvestment of dividends, was approximately 11.5% per
year. During this period, the highest 12-month return was 64%, and the
lowest was -39%. Savings accounts at a bank pay as little as 1% or
less. It is important to remember that future rates of return can't be
predicted with certainty and that investments that pay higher rates of
return are subject to higher risk and volatility. The actual rate of
return on investments can vary widely over time, especially for
long-term investments. This includes the potential loss of principal
on your investment.
- Age of retirement
- Age you wish to retire. This calculator
assumes that the year you retire you do not make any contributions to
your IRA. So if you retire at age 65, your last contribution happened
when you were actually 64.
- Current tax rate
- The current marginal income tax rate you
expect to pay on your taxable investments.
- Retirement tax rate
- The marginal tax rate you expect to pay on
your investments at retirement.
- Adjusted gross income
- Your adjusted gross income from your taxes.
This is used to calculate whether you are able to deduct your annual
contributions from your income tax statement.
- Are you married?
- Check the box if you are married. This is used
to determine whether you can deduct your annual contributions from
your taxes.
- Employer plan?
- Check the box if you have an employer
sponsored retirement plan, such as a 401k or pension. This is used to
determine if you can deduct your annual contributions from your taxes.
- Total non-deductible contributions
- The total of your Traditional IRA
contributions that were deposited without a tax deduction. Traditional
IRA contributions are normally tax-deductible. However, if you have an
employer sponsored retirement plan, such as a 401(k), your tax
deduction may be limited.
In 2003, for single tax filers with an
employer sponsored retirement plan, an IRA contribution is fully
tax-deductible if your income is below $40,000. It is then prorated
between $40,000 and $50,000. If your income is over $50,000 and you
have a employer sponsored retirement plan such as a 401(k) you receive
no tax deduction. For married couples the same rules apply except the
deduction is phased out between 60,000 and $70,000. The phase-out
ranges are scheduled to increase over the next few years. The table
below summarizes the deduction phase-out for 2002 - 2007.
Traditional IRA Deduction Income Phase-Out Ranges |
| Year |
Single
Taxpayers |
Married
Taxpayers Filing Jointly |
| 2003 |
$40,000-$50,000 |
$60,000-$70,000 |
| 2004 |
$45,000-$55,000 |
$65,000-$75,000 |
| 2005 |
$50,000-$60,000 |
$70,000-$80,000 |
| 2006 |
$50,000-$60,000 |
$75,000-$85,000 |
| 2007 |
$50,000-$60,000 |
$80,000-$100,000 |
This calculator automatically determines if
your tax deduction is limited by your income. However, there are two
unusual situations not automatically accounted for where additional
tax phase-outs are applied. First, if your spouse has an employer
sponsored retirement plan but you do not, your tax deduction is phased
out from $150,000 to $160,000. Second, if you are married filing
separately and have a employer sponsored retirement plan, the income
phase-out is from $0 to $10,000.
- Total contributions
- The total amount contributed to your IRA.
- IRA total after taxes
- For the Roth IRA this is the total value of
the account. For the Traditional IRA this the sum of two parts: 1) The
value of the account after you pay income taxes on all earnings and
tax-deductible contributions and 2) what you would have earned if you
had invested (in an ordinary taxable account) any income tax savings.
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