A Roth IRA is a retirement account you fund with money you've already paid taxes on — so every dollar of growth and every withdrawal in retirement comes out completely tax-free. In 2026 you can contribute up to $7,500 ($8,600 if you're 50 or older), as long as your income is under the limit.
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The core idea
A Roth IRA is an individual retirement account with one defining feature: you contribute after-tax dollars, and in exchange the government never taxes that money again. The contributions grow tax-free, and qualified withdrawals in retirement are tax-free too (IRS — Roth IRAs).
That's the opposite of a traditional IRA or a standard 401(k), where you get a tax deduction now but pay ordinary income tax on every dollar you pull out later. With a Roth, you pay the tax up front and lock in tax-free growth for decades.
Why "tax-free growth" matters so much
The benefit isn't the deposit — it's everything the deposit earns. If you contribute $7,000 and it grows to $70,000 over thirty years, a Roth means that entire $63,000 of gains is yours, untaxed. In a taxable account, those gains would be subject to capital gains tax when realized (IRS — Topic No. 409, Capital Gains).
This is why Roth accounts are especially powerful for younger savers: the longer the runway, the more compounding happens, and the more tax you're permanently avoiding.
The 2026 rules
For tax year 2026, the IRS set the contribution and income limits as follows (IRS — 2026 contribution limits):
- Contribution limit: up to $7,500 per year — or $8,600 if you're 50 or older (a $1,100 catch-up).
- Income limits: the ability to contribute phases out between $153,000–$168,000 for single filers and $242,000–$252,000 for married couples filing jointly. Above those ranges, you can't contribute to a Roth directly.
- The limit is the combined total across all your IRAs (Roth and traditional), not per account.
The rules that trip people up
Two conditions make a withdrawal of earnings fully qualified (tax- and penalty-free): the account must be at least five years old, and you must be at least 59½ (IRS — Roth IRAs).
One major flexibility: because you already paid tax on your contributions, you can withdraw those original contributions (not the earnings) at any time, for any reason, without tax or penalty. That makes a Roth quietly double as a backstop emergency reserve — though using it that way costs you irreplaceable tax-advantaged space.
If your income is above the limit, the commonly used workaround is a backdoor Roth — contributing to a traditional IRA and converting it — which the IRS permits but which has tax nuances worth understanding first.
Who a Roth is best for
A Roth IRA is generally the stronger choice if you expect to be in the same or a higher tax bracket in retirement than you are now — which describes most people early in their careers. You're paying tax at today's lower rate to avoid a higher one later. A traditional account tends to win only if you expect your tax rate to fall significantly in retirement.
For most people the honest answer is "do both where you can" — capture any 401(k) match first, then fund a Roth IRA (Consumer Financial Protection Bureau — saving for retirement).
