Roth IRA

Reviewed 11 August 2026 · Sourced from the IRS — Publications 590-A and 590-B, Notice 2025-67 and the Form 8606 instructions

What a Roth IRA actually is

You have money you can leave alone for a long time. Putting it somewhere is not the hard part. The tax is — thirty years of small bites out of one pile is a large bite.

A Roth IRA is the wrapper that stops them. It is an individual retirement arrangement — you open it yourself at a brokerage, no employer and no permission — funded with money you have already paid income tax on. The IRS is direct about the first half of the bargain on its Roth IRAs page: “You cannot deduct contributions to a Roth IRA.” No break in April. The break is at the far end: “If you satisfy the requirements, qualified distributions are tax-free.”

It is a timing trade: tax at a rate you know today instead of one nobody can quote you thirty years out. Which end is better turns on facts that do not exist yet, so this page sticks to the rules.

What you can put in for the 2026 tax year

Four limits govern a contribution. Most people know one.

The dollar cap. For 2026 the IRA contribution limit is $7,500, plus a $1,100 catch-up at 50 or older, for a total of $8,600 — IRS news release IR-2025-111 of 13 November 2025 and Notice 2025-67. It is combined across every IRA you own: the IRS wording is that total contributions to all of your traditional IRAs and Roth IRAs cannot be more than the limit.

The compensation cap. You cannot contribute more than your taxable compensation for the year. There is no upper age limit, though — the IRS removed it for 2020 and later — and no lower one, which is why a teenager with a paycheck can hold a custodial Roth.

The income phase-out. Specific to Roth contributions, and where people get shut out.

That last row surprises people mid-separation. File separately, live with your spouse at any point in the year, and the range starts at zero — in practice no direct Roth contribution at all.

The deadline. Publication 590-A allows a contribution “at any time during the year or by the due date for filing your return for that year, not including extensions.” For the 2026 tax year that is 15 April 2027. Filing an extension does not extend it.

Your own contributions are not locked up

The fear that keeps people out of a Roth is that the money vanishes until they are old. For the part you put in, that is not how it works.

Publication 590-B fixes the order money leaves a Roth IRA, and it is not your choice or the brokerage's. Regular contributions first. Then conversions. Then earnings. Separately, Tax Topic 557 says the 10% additional tax “applies to the part of the distribution that you have to include in gross income.” Contributions were made with taxed money, so they are not includible. Together those give you the most useful fact about this account: your own contributions come back out at any age, for any reason, with no tax and no penalty.

Earnings are the restricted part. Pulling those out clean requires a qualified distribution — the five-year period satisfied plus one of exactly four conditions:

• You have reached age 59½.
• It is paid to a beneficiary or your estate after death.
• You are disabled within the meaning of the rule.
• It funds a first-time home purchase — capped at $10,000 over your lifetime, not per purchase.

That period starts with the first tax year you contributed to any Roth IRA — a clock on the account, not on each deposit. The cheapest move is opening one early with a small amount.

One correction, because this is usually stated too hard. It is often said money pulled out of a Roth can never go back. Past 60 days, true. Inside 60 days, not: the IRS gives you “60 days from the date you receive an IRA or retirement plan distribution to roll it over” — but only one such rollover in any 12-month period, counted across all your traditional, SEP, SIMPLE and Roth IRAs together.

Keep your own running total of lifetime contributions. It is the ceiling on what comes out penalty-free.

Roth or traditional: the same money, taxed at different ends

The two accounts hold the same investments and differ only in when the government takes its share. Traditional: a deduction may come now, the tax comes later. Roth: no deduction now, no tax later. The difference people underrate is not the deduction — it is what happens in your seventies.

On the traditional side, the IRS states you generally must start taking withdrawals from traditional, SEP and SIMPLE IRAs and retirement plan accounts when you reach age 73. That is the required beginning age today; SECURE 2.0 raises it to 75 in 2033, scheduled but not in force. Either way, taxable income arrives on the government's schedule rather than yours.

The Roth side has no such machinery. Publication 590-B: “If you are the original owner of a Roth IRA, you don't have to take distributions regardless of your age.” The RMD FAQs put it the other way — the RMD rules do not apply to Roth IRAs while the owner is alive. That is why the two facts belong together: age 73 is the thing a Roth is an exemption from.

When your income is over the limit

Cross the phase-out and you are told you cannot have a Roth IRA. What you cannot do is contribute directly. Two rules stay open.

First, there is no income limit on a nondeductible contribution to a traditional IRA. Income limits the deduction, not the contribution — IR-2025-111 frames the 2026 ranges as phase-outs for determining deductibility, and Form 8606 exists to report nondeductible contributions.

Second, there is no income limit on converting a traditional IRA to a Roth. A $100,000 MAGI cap used to exist; the 2010 edition of Publication 590 records its removal and nothing since reinstates it. Contribute, then convert — the whole of what people call the backdoor Roth. Three rules decide whether it works.

The pro-rata rule

You do not choose which dollars convert. The Form 8606 instructions have you enter the total value of all your traditional, SEP and SIMPLE IRAs as of 31 December of the conversion year. If most of that total is pre-tax, most of your conversion is taxable, even if the dollars you moved were after-tax. Roth balances sit outside it, and so do employer plans — which is the standard fix. The IRS rollover chart allows a traditional IRA to be rolled into a qualified employer plan, moving the pre-tax balance out of the sum before 31 December.

Form 8606

Not optional paperwork. Its instructions set a $50 penalty for failing to file, absent reasonable cause, and $100 for overstating nondeductible contributions. Worse, without it nothing records that the money was already taxed, and you can pay tax twice.

Two clocks you cannot rewind

A conversion made in 2018 or later cannot be undone. Publication 590-A: no recharacterizations of conversions made in 2018 or later. And each conversion starts its own five-year clock: take converted money out before 59½ and inside that window, and the 10% additional tax applies, even though you already paid income tax on the conversion.

Roth money that does not come from an IRA

The workplace plan. For 2026 the 401(k) elective deferral limit is $24,500 and the total annual additions limit — employee plus employer plus after-tax, the ceiling behind the mega-backdoor — is $72,000, both from Notice 2025-67. Whether your plan permits after-tax contributions and in-plan Roth conversions is a question for your administrator.

The mandatory Roth catch-up. For 2026, catch-ups must be designated Roth if your 2025 wages from the employer sponsoring the plan exceeded $150,000 — Notice 2025-67 raised that from $145,000. Read it closely — wages from that employer, so someone self-employed with no such wages is not caught.

Leftover 529 money. For distributions after 31 December 2023, unused 529 funds can move into the beneficiary's Roth IRA. Tax Topic 313 stacks four conditions: a $35,000 lifetime limit, the 529 open at least 15 years, nothing contributed in the five years before it being eligible to move, and each transfer counting against that year's Roth limit. Trustee-to-trustee only.

What an heir actually receives

A Roth IRA passes tax-free, and still comes with a deadline.

For owners who died after 31 December 2019, most non-spouse beneficiaries fall under the SECURE Act's ten-year rule. Publication 590-B requires beneficiaries not taking life expectancy payments to withdraw the entire balance “by December 31 of the year containing the 10th anniversary of the owner's death.” It replaced the older five-year rule; Notice 2024-35 confirms the framework.

Eligible designated beneficiaries are excepted: a surviving spouse, a minor child of the owner, someone disabled or chronically ill, and anyone not more than ten years younger. Everyone else — an adult child, a sibling, a friend — is on the ten-year clock.

What lands is the point. Ten years of withdrawals from an inherited traditional IRA is ten years of ordinary income, often stacked on an heir's peak earning years. From an inherited Roth it is tax-free. Same statement balance, very different amount in the bank.

What trips people up

• Thinking the money is locked away. Your own contributions come out at any age, tax-free and penalty-free. Only earnings are restricted.
• Treating the Roth as the emergency fund. The withdrawal is allowed, but the room does not come back — outside the one 60-day rollover per 12 months, a year's limit spent is spent. That is what an emergency fund is for.
• Assuming two accounts mean two limits. The $7,500 is combined across every IRA you own, and capped at your taxable compensation.
• Filing separately without checking. That puts the 2026 phase-out range at $0 – $10,000 if you lived with your spouse.
• Running a backdoor Roth with a pre-tax IRA still sitting there. Every traditional, SEP and SIMPLE balance at 31 December enters the pro-rata math, and the conversion cannot be undone.
• Skipping Form 8606. $50 for not filing, $100 for overstating, and no paper trail proving the money was already taxed.
• Using a memorised limit. Every figure here is a 2026 figure, re-indexed annually.

The figures on this page are checked against the source that publishes them, and dated. Published rates move after the release named above — the linked source always carries the current number. This page explains a term; it does not recommend a product.