Free Roth IRA Calculators

A feature by feature in depth analysis of numerous free Roth IRA Calculators.  Why "free" really isn't "free." (You get what you pay for!)
 

The DTS Roth IRA Calculator -- It Isn't Free (You will see why shortly.)

Order & Download Now! Special discounted price through 7/29/2017 $119. Regular Price $149. (3,400 KB Approx. 1 minute download)

Description of Important Features
Comparison of Free Roth IRA Calculators

Features That You Should Look For

FEATURE WHY THE FEATURE IS IMPORTANT
Cost of Capital Also called minimum required rate of return.  This is to consider the time value of money. When analyzing an investment that exists for a number of years, this is essential.  A dollar today is worth much more than a dollar 20 years from now. Put another way, if the financial analysis does not consider the time value of money, it is worthless!
Rate of Return This is what you earn on the IRA.
Pay Rollover Tax from IRA Funds Some investors won't have funds outside of the IRA to pay the rollover tax.  If the free Roth IRA Calculator assumes that the rollover tax will be paid from funds outside of the IRA but the tax is actually paid with IRA funds, the computations are likely to give very incorrect results.
10% Early Distribution Penalty Applies If the Traditional IRA to Roth IRA rollover conversion tax is paid from IRA funds and the IRA owner is younger than 59˝ years old, a 10% penalty will apply to Traditional IRA funds used to pay the rollover tax.  You can make the wrong Roth Vs Regular IRA decision, if this is ignored.
Pay Rollover Tax in 2011 & 2012 Most will want to pay the 2010 rollover tax in 2011 & 2012. There are notable exceptions.  Your taxes may be lower, if paid in 2010 when your income is much lower in 2010 than in 2011 and 2012.  Your taxes might be much lower, if paid in 2010, if tax rates go much higher in 2011 and 2012 due to the budget deficit and related tax rate increases.
Is the Rollover Year 2010? You can spread the Roth rollover tax over 2011 and 2012, if the rollover is 2010. If the rollover is a different year, the conversion tax will be paid when income for that year is taxed.
Take Distributions from the Roth IRA You don't have to take distributions from a Roth IRA, unless the Roth IRA is inherited.  The cashflows will be different if you don't take distributions from the Roth IRA.
Nondeductible IRA Amount The amount that was contributed to a nondeductible does not create any rollover tax.
Distribute the IRA over Years Some IRA owners will want to take distributions over a certain number of years.
Take the Same After-Tax Distributions each Year Some IRA owners will want to take the same amount each year from the IRA.  It is important to consider the after-tax amount.  The after-tax amount  will be different than the pre-tax amount for the Regular IRA.  If you need $10,000 each year from your Traditional IRA, you will need to take a larger amount, because it is taxable.  Thus, to receive $10,000 net of tax from a Traditional IRA, you might need an IRA distribution of $14,000 ($4,000 was withheld for tax.) However, if you need $10,000 from a Roth IRA, you take a $10,000 Roth distribution, since it is tax free.
Current Tax Rate It may be important to use different tax rates for before and after retirement.
Tax Rate During Retirement It may be important to use different tax rates for before and after retirement.
Rate for Estate Tax Traditional IRAs and Roth IRAs can both be subject to estate tax. You cannot assume that the estate tax will be the same for both types of IRAs, since the balances at death could be different.
Estimated Date of Death We don't like to think of these things, but this is important in estimating when estate tax, if any, is paid, and when the heirs will pay tax, if any, the inherited IRA.
Heirs' Tax Rate Heirs will pay tax on Traditional IRA distributions. If there is estate tax paid, heirs may also get a deduction for something called Income in Respect of the Decedent (IRD). These can be significant factors in the economics of a Traditional vs. Regular IRA.

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Comparison of Roth Vs Traditional IRA Calculators

The Websites on this list were found when doing a Google search for "Roth IRA calculators".

Observation: We could have added many more "free" Roth IRA Calculators.  They were all starting to look the same. Some, e.g. Mass Mutual and Bankrate.com, were the same! None of the free calculators addressed the 2010 tax law changes, time value of money issues or after death issues. Our program did address those issues, but our program isn't free either.

FEATURE Denver Tax Software Mass Mutual T. Rowe Price John Hancock MSN Money Planning Tips Ameri-
prise
TDAmeritrade
#1
TDAmeritrade
#2
BankRate.com  
Price $119 free free1 free free free free free free free  
Cost of Capital Yes NO   NO NO NO NO NO NO NO  
Rate of Return Yes Yes   Yes Yes Yes Yes Yes Yes Yes  
Pay Rollover Tax from IRA Funds Yes NO   NO Yes NO NO NO NO NO  
10% Early Distribution Penalty Applies Yes NO   NO NO NO NO NO NO NO  
Pay Rollover Tax in 2011 & 2012 Yes NO   NO NO NO NO NO NO NO  
Is the Rollover Year 2010? Yes NO   NO NO NO NO NO NO NO  
Take Distributions from the Roth IRA Yes NO   NO NO NO NO NO NO NO  
Nondeductible IRA Amount Yes NO   Yes Yes NO Yes NO Yes NO  
Distribute the IRA over Years Yes NO   NO Yes NO Yes NO NO NO  
Take the Same After-Tax Distributions each Year Yes NO   NO NO Yes NO NO NO NO  
Current Tax Rate Yes Yes   Yes Yes Yes Yes Yes Yes Yes  
Tax Rate During Retirement Yes NO   Yes NO Yes Yes Yes Yes NO  
Rate for Estate Tax Yes NO   NO NO NO NO NO NO NO  
Estimated Date of Death Yes NO   NO NO NO NO NO NO NO  
Heirs' Tax Rate Yes NO   NO NO NO NO NO NO NO  

Notes:

1 It is free because you have to make the computations!

 

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