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Comparison at Retirement
1. These assumptions and figures are hypothetical and do not imply the future performance of any State Farm product, nor appropriateness of any Federal Income Tax rates.
2. Assumed tax rates represent only Federal Income Tax. State taxes should also be considered.
3. Roth IRA distributions are assumed to be qualified distributions and received Federal Income Tax free.
4. Contributions to the Traditional IRA are assumed to be fully deductible from Federal Taxable Income. Distribution from the Traditional IRA is shown after deduction of assumed Federal Income taxes. Distributions prior to age 59 1/2 may be subject to an additional 10% penalty tax.
5. It is assumed all funds are accumulated to retirement and then withdrawn. Traditional IRAs have required minimum distributions beginning by April 1 of the year following the year of attainment of age 70 1/2.
6. The Traditional IRA values include an additional non-IRA taxable fund attributable to the annual Federal Income Tax savings. It is assumed this fund is invested in a taxable account earning the assumed rate of return, reduced by the assumed current Federal Income Tax rate on the earnings.
This calculator and the information provided is for general information and education purposes only. Whether you choose a Traditional IRA or a Roth IRA, it is important to understand future tax laws may change. Such changes may impact the actual results of your decision in a positive or negative way. You should consult with your tax advisor to determine which IRA is better for you.