A Roth IRA is an individual retirement account (IRA) that offers tax-free growth and tax-free withdrawals in retirement, provided certain conditions are met. Unlike traditional IRAs, contributions to a Roth IRA are made with after-tax dollars, meaning you don't get an up-front tax deduction. However, this also means that when you withdraw the money in retirement, you won't owe any federal income taxes on the withdrawals. This can be particularly beneficial if you anticipate being in a higher tax bracket in retirement.
For 2026, the contribution limit for a Roth IRA is $7,500 for those under age 50, and $8,600 for those age 50 and older. However, your ability to contribute may be limited based on your income. For 2026, single filers must have a modified adjusted gross income (MAGI) of less than $153,000 to make a full contribution. For married couples filing jointly, this limit is $242,000. One appealing aspect of a Roth IRA is the flexibility it offers: you can withdraw your contributions at any time, tax and penalty-free. Earnings, however, are subject to certain restrictions. Roth IRAs do not have required minimum distributions (RMDs), allowing the money to continue growing tax-free for as long as the owner desires.
