Roth IRA Deposit Calculator
See whether depositing your full Roth IRA contribution at the start of the year or spreading it across twelve monthly deposits builds a bigger balance over time.
Deposit Strategy
Compare lump sum vs monthly deposits
Early investment captures more growth
Lump Sum (Jan 1st)
Monthly (DCA)
Strategy Comparison
Growth Over Time
How the Deposit Comparison Works
The calculator runs two identical accounts that receive the same total each year. One gets the full amount on January 1st. The other gets one twelfth of it at the start of every month.
Both accounts compound monthly at the same return. The only difference is how long each dollar sits invested, which is why the lump sum usually finishes ahead.
Set your annual deposit
Enter the total you plan to contribute each year. The monthly plan divides it by 12.
Choose horizon and return
Years of investing and expected return apply equally to both strategies.
Add any current balance
An existing Roth balance grows identically in both scenarios, so it widens both totals without changing the gap.
What Is the Formula?
Monthly compounding uses one twelfth of the annual return each month. Over a full year that equals an effective return of about 8.30% when you enter 8%.
- A : Annual deposit
- The total you contribute each year under either strategy.
- r : Annual return
- Your expected yearly return, applied as r ÷ 12 per month.
- B : Balance
- The account value, starting from your current Roth IRA balance.
- y, m : Periods
- Years for the lump sum account, months for the monthly account.
Lump Sum vs Monthly: Results by Time Horizon
The gap starts small but grows with time, because each year’s head start compounds too. Values assume $7,000 a year, an 8% return, and no starting balance.
| Years | Total deposited | Lump sum | Monthly | Lump sum edge |
|---|---|---|---|---|
| 5 | $35,000 | $44,741 | $43,147 | $1,594 |
| 10 | $70,000 | $111,399 | $107,430 | $3,969 |
| 20 | $140,000 | $358,666 | $345,886 | $12,780 |
| 30 | $210,000 | $907,508 | $875,172 | $32,336 |
| 40 | $280,000 | $2,125,741 | $2,049,997 | $75,744 |
Assumes a steady return; in a year when prices fall after January, monthly deposits can come out ahead.
Example: $7,000 a Year for 30 Years
Using the default settings, here is how one year of each strategy plays out and what that difference becomes after three decades.
- 1Lump sum, year one: $7,000 × (1 + 0.08 ÷ 12)12 = $7,581.
- 2Monthly, year one: twelve deposits of $583.33, each compounding from its own month, reach $7,311.
- 3The first year gap is $270. Carried forward and repeated every year, it compounds for 30 years.
FAQs
You can contribute for a tax year until the federal filing deadline, usually April 15 of the following year.
The full amount is invested for all 12 months, while monthly deposits are invested for about half the year on average.
Yes, when prices fall during the year or when monthly paychecks are the only way you can reach the full contribution.
No, it applies a steady monthly return, so it isolates the effect of timing rather than volatility.
Depositing $583.33 a month for 12 months adds up to exactly $7,000.
No, the limit covers all deposits for the tax year, and any excess faces a 6% excise tax for each year it stays in the account.
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