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A Roth Individual Retirement Account is a retirement savings account funded with after-tax dollars. You pay taxes on the money before contributing, and in exchange, qualified withdrawals in retirement are completely tax-free, including all the investment growth. There are no required minimum distributions during the account owner's lifetime, giving you the flexibility to let the money grow as long as you choose.
Think of it like buying a gift, paying sales tax now, then opening the gift later, tax-free, no matter how much more valuable it has become.
For the 2025 tax year, you can contribute up to $7,000 to a Roth Individual Retirement Account, or $8,000 if you are 50 or older. The 2026 limit increases to $7,500 for those under 50, and $8,600 for those 50 and older. These limits apply to the combined total across all your Individual Retirement Accounts, both traditional and Roth.
You can contribute to a Roth Individual Retirement Account any time during the tax year, and up until the federal tax filing deadline of the following year. For 2025 contributions, the deadline is April 15, 2026.
Your ability to contribute to a Roth Individual Retirement Account phases out at higher income levels. For 2025, single filers can make full contributions if their Modified Adjusted Gross Income is below $150,000. The contribution phase-out begins at $150,000 and eliminates all eligibility at $165,000. For married couples filing jointly, the phase-out range is $236,000 to $246,000 in 2025.
In 2026, these limits increase. Single filers can make full contributions with a Modified Adjusted Gross Income below $153,000, with phase-out ending at $168,000. Joint filers can contribute fully below $242,000, with phase-out ending at $252,000. If your income exceeds these limits, you still have options, including the backdoor Roth Individual Retirement Account strategy, which involves making a non-deductible contribution to a traditional Individual Retirement Account and then converting it.
Qualified withdrawals from a Roth Individual Retirement Account meet two conditions: you are at least 59 and a half years old, and your account has been open for at least five years. When both conditions are met, all withdrawals, including growth, are completely free from federal income tax.
Contributions can be withdrawn at any time without taxes or penalties because you already paid taxes on that money. Only earnings are subject to the age and five-year holding requirements. This flexibility makes the Roth Individual Retirement Account more accessible than other retirement vehicles in an emergency, though drawing down retirement savings early reduces the long-term benefit of tax-free compounding.
Traditional Individual Retirement Accounts and 401(k) plans require you to begin taking annual withdrawals starting at age 73. These required minimum distributions force you to pull money out and pay taxes on it, whether you need the funds or not.
Roth Individual Retirement Accounts have no required minimum distributions during the account owner's lifetime. This makes them especially powerful for estate planning. You can leave the funds to grow indefinitely and pass a tax-free inheritance to your beneficiaries. It also allows high earners who do not need retirement income to keep compounding wealth inside the account rather than taking forced taxable distributions.
| Roth IRA | Traditional IRA | |
|---|---|---|
| Tax treatment on contributions | After-tax; no deduction | Pre-tax if eligible; deductible up to income limits |
| Tax treatment on withdrawals | Tax-free if qualified | Taxed as ordinary income |
| Income limit to contribute | Yes; phases out above certain levels | No income limit to contribute, but deductibility phases out |
| Required minimum distributions | None during owner's lifetime | Required starting at age 73 |
| Best for | Younger earners expecting higher taxes in retirement; estate planning | Higher-income earners who want a current-year tax deduction |
The right choice between the two depends on whether you expect to be in a higher or lower tax bracket in retirement. If you expect higher taxes later, the Roth wins because you lock in today's lower rate. If you expect lower taxes in retirement, the traditional Individual Retirement Account's upfront deduction is more valuable.
Starting in 2024, beneficiaries of 529 college savings plans can roll unused funds into a Roth Individual Retirement Account. The 529 account must have been open for at least 15 years. The rollover is subject to the annual Roth Individual Retirement Account contribution limits, and there is a lifetime aggregate limit of $35,000. This rule gives families a way to redirect unused college savings toward retirement without tax penalties.
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