Set your assumptions
Change a value to explore a scenario.
Shared links include your inputs. Use example values if you do not want to disclose your numbers.
Your scenario
Read the result alongside the assumptions.
Projected Roth account balance
—- Next-year gross dividend run rate
- —
- Roth invested balance
- —
- Cash retained inside Roth
- —
- Cumulative Roth dividends generated
- —
- Starting balance + new deposits
- —
- Taxable comparison balance
- —
- Balance difference from dividend tax
- —
Annual account breakdown
Balances include cash retained inside each account. Starting balance plus new deposits is not necessarily your tax basis.
| Year | Start + deposits | Roth invested | Roth cash | Roth total | Taxable total |
|---|
How this Roth dividend model works
A Roth IRA is an account type, not an investment with a fixed return. The holdings determine the dividend yield and price changes. Enter the invested portion of the account, an annual contribution assumption, a dividend yield and a separate price-only return. A total-return assumption that already includes dividends should not be entered again as the price return.
The model calculates monthly dividends = opening invested balance × annual yield ÷ 12. Price growth is applied using (1 + annual price return)1/12. Dividends are then reinvested at the modeled month-end price or moved to cash, and one twelfth of the annual contribution is invested at month end. New deposits start earning in the next month. This assumes fractional shares, a constant yield and monthly dividend payments.
The Roth projection deducts no ongoing U.S. income tax on ordinary investment earnings retained in the account. The comparison deducts your illustrative tax rate from each taxable-account dividend before reinvestment or cash retention. It does not tax unrealized price gains or calculate tax due when investments are sold. Foreign withholding, investment fees and unusual investments with separate tax treatment are outside the model.
Example: $10,000 with a 4% dividend yield
Start with $10,000, make no contributions, assume a 4% annual dividend yield and no price change, and project one year. With monthly reinvestment, the Roth balance becomes approximately $10,407.42: $10,000 × (1 + 0.04/12)12. With reinvestment off, the account instead holds $10,000 invested plus $400 cash, or $10,400 total.
At an illustrative 15% tax on dividends in the taxable comparison, monthly reinvestment produces about $10,345.35. The approximately $62.07 balance difference includes both taxes deducted and the return those deducted dollars would have generated. These are model outputs, not a forecast for a particular fund or stock.
Dividends inside a Roth are different from withdrawals
Turning reinvestment off does not send money to your bank account in this calculator. Cash remains inside the IRA. A distribution from the account is a separate event governed by Roth withdrawal rules, regardless of whether the cash originally came from dividends.
For the usual age-based qualified distribution, the IRS requires both the applicable five-tax-year period and reaching age 59½. Other qualifying circumstances exist. A nonqualified distribution can involve ordering rules, earnings tax and additional tax. Use the Roth withdrawal-order calculator for that separate question.
The contribution input is a planning assumption, not an approval to contribute that amount. Eligibility depends on applicable limits, compensation, filing status and income; contributions to other IRAs also matter. No future contribution-limit increases are assumed here.
How to read the comparison
The next-year dividend run rate is the ending invested balance multiplied by the selected yield. It is not the dividends already earned during the last year, and it is not a guaranteed withdrawal amount. Cash held aside does not generate dividends in this model.
Compare several plausible yields and price returns. A higher dividend yield does not by itself make an investment better; distributions can change and market prices can fall. The result also excludes account access restrictions, capital-gains tax on liquidation and the tax cost of conversions. For a spending target across accounts, use the live-off-dividends calculator.
Frequently asked questions
Does reinvesting a dividend use my Roth contribution limit?
Reinvestment of earnings already inside the IRA is not a new outside contribution. The contribution input here models new money entering the account; verify your eligibility and limits separately.
Can I take the projected dividends out tax-free?
The calculator does not determine that. Cash inside the IRA and a distribution from the IRA are different. Whether earnings can be withdrawn tax-free depends on qualified-distribution rules and your circumstances.
Why is the taxable comparison not a complete Roth-versus-brokerage analysis?
It models only a flat tax on dividends. It excludes tax on sales, foreign withholding, fees, conversion taxes, account access rules and contribution eligibility.
Sources & model notes
- IRS: Roth IRAs and contribution eligibility
- IRS Publication 590-B: qualified distributions and ordering rules
- Investor.gov: dividend reinvestment
Calculator, formulas and examples by FinancialDepth, checked October 23, 2026. Sources explain the underlying account or product rules; numerical projections come from the assumptions shown on this page. See our methodology and limitations.
Continue planning
Explore all financial calculators.