Roth IRA: The Complete Guide

TL;DR: A Roth IRA is a retirement account funded with after-tax dollars, which means every qualified withdrawal in retirement, including decades of investment growth, comes out completely tax-free. For 2026, you can contribute up to $7,500 across all your traditional and Roth IRAs combined, or $8,600 if you are 50 or older, as long as your income falls under the Roth phase-out range and you have enough earned compensation to cover the contribution. You can withdraw your own contributions at any age without tax or penalty, and unlike a traditional IRA, the original owner never has to take required minimum distributions.

How a Roth IRA Works

A Roth IRA takes after-tax contributions today so that qualified withdrawals, including all the growth the account earns along the way, come out completely tax-free in retirement.

A Roth IRA is an individual retirement account funded with money you have already paid income tax on. Because the government has already taxed the contribution, it does not tax a later qualified withdrawal, a term defined in detail below. This is the mirror image of a traditional IRA, where contributions may be tax-deductible today but ordinary income tax applies to withdrawals later. The Internal Revenue Service states the core rule plainly: you cannot deduct a Roth contribution, and a qualified Roth distribution is not included in your taxable income at all. For a full side-by-side comparison of the two structures, see our traditional IRA guide.

Every dollar inside a Roth IRA, including dividends, interest, and capital gains the investments generate, compounds without an annual tax drag, unlike the same activity in a regular taxable brokerage account. Roth accounts are one piece of a broader IRA investing strategy, and the account types fit together as a set worth understanding before you decide where new money goes.

2026 Roth IRA Contribution Limits and Who Can Contribute

For 2026, you can contribute up to $7,500 to a Roth IRA, or $8,600 if you are 50 or older, as long as you have enough earned compensation to cover it.

The Internal Revenue Service raised the IRA contribution limit for 2026 to $7,500, up from $7,000 the year before. Savers age 50 and older can add a $1,100 catch-up contribution, for a total of $8,600. This limit is combined across every traditional and Roth IRA you own, so contributing to both in the same year does not double your ceiling.

The limit is also capped by compensation. You cannot contribute more than your taxable compensation for the year, even when that figure falls below $7,500. There is one notable exception: a spousal IRA lets a non-working or lower-earning spouse contribute based on the working spouse’s compensation, as long as the couple files a joint return. See our full breakdown of contribution limits across every IRA type for the traditional-IRA deduction phase-outs and the SEP and SIMPLE figures that sit alongside these Roth numbers.

2026 Roth IRA Income Limits

Your ability to contribute directly to a Roth IRA phases out at modified adjusted gross income between $153,000 and $168,000 if you file single or head of household, and between $242,000 and $252,000 if you file married filing jointly.

These phase-out ranges apply to direct Roth contributions only. Below the bottom of the range, you can contribute the full limit. Inside the range, your allowed contribution shrinks proportionally. Above the top of the range, you cannot contribute directly at all. A married taxpayer who files separately and lived with their spouse at any point in the year faces a far narrower $0 to $10,000 range, since that figure does not receive an annual cost-of-living adjustment.

Earning too much to contribute directly does not lock you out of a Roth entirely. Savers above the income limit commonly use a two-step conversion, sometimes called a backdoor Roth, to move money into a Roth account regardless of income. That mechanic and its main trap deserve their own explanation and are covered in our backdoor Roth IRA guide alongside our broader Roth conversion guide.

What Makes a Roth IRA Withdrawal Qualified

A Roth withdrawal is tax-free and penalty-free only when it is qualified, which requires both that five tax years have passed since your first Roth contribution and that you meet one of four specific conditions.

Under section 408A of the tax code, a distribution counts as qualified when it is made after the five-tax-year period described below and at least one of four things is also true: you have reached age 59 and a half, the distribution goes to a beneficiary or your estate after your death, you are disabled, or the distribution is a qualified first-time homebuyer withdrawal. The homebuyer exception carries its own lifetime cap, set by section 72(t) of the tax code at $10,000, and that figure is not adjusted for inflation.

Miss either half of the test, the five-year clock or one of the four conditions, and the withdrawal is not qualified. That does not automatically mean it is taxed or penalized, because the ordering rules below determine exactly which dollars come out first.

The Roth IRA’s Five-Year Rules and Withdrawal Ordering

A Roth IRA actually runs on two different five-year clocks, one for your very first Roth contribution and a separate one for each conversion, and mixing them up is the single most common Roth mistake.

The first clock covers qualified distributions overall. It begins with the first tax year for which you made a contribution to any Roth IRA, and you run only one such clock for your whole life, even if you later open additional Roth accounts. The second clock is separate and applies per conversion. Each dollar you convert from a traditional IRA to a Roth IRA carries its own five-year period for purposes of the 10 percent early-distribution penalty on the taxable portion of that conversion, and multiple conversions made in different years create multiple, staggered clocks.

When you take money out of a Roth IRA, the ordering rules determine exactly which dollars are treated as leaving first. Withdrawals come out of your regular contributions first, tax-free and penalty-free at any age, since you already paid income tax on that money. Only once your contributions are exhausted do withdrawals move to conversion amounts, oldest conversion first, with the taxable portion of each conversion treated as coming out before its nontaxable portion. Earnings are always the last dollars out, and those are the dollars that must clear the qualified-distribution test above to avoid both tax and penalty.

Roth IRA Withdrawal Rules Before Age 59 and a Half

Because contributions come out first under the ordering rule, you can withdraw the money you personally put into a Roth IRA at any age without owing tax or penalty, but reaching into earnings early generally triggers both.

This is why the ordering rule matters so much in practice. A saver can pull out original contributions for an emergency without an income-tax consequence, but reaching further into conversion or earnings money before its own clock and condition are satisfied exposes that portion to tax, a 10 percent early-distribution penalty, or both. The four conditions covered above, reaching age 59 and a half, death, disability, or the capped first-time homebuyer distribution, are the exceptions the tax code recognizes for treating an early withdrawal of earnings as qualified.

No Required Minimum Distributions for the Original Owner

Unlike a traditional IRA, a Roth IRA never forces the original owner to take required minimum distributions during their lifetime.

Traditional, SEP, and SIMPLE IRA owners must begin required minimum distributions at age 73. A Roth IRA carries no such requirement for the original account holder, so the money can keep compounding tax-free for as long as the owner lives, whether or not it is ever withdrawn. That difference makes a Roth useful for estate planning as well as retirement income.

The exemption does not carry over to whoever inherits the account. Most beneficiaries who are not the account owner’s spouse must empty an inherited Roth IRA within 10 years of the owner’s death. Five categories of beneficiary, a surviving spouse, a minor child of the owner, a disabled individual, a chronically ill individual, and someone not more than 10 years younger than the owner, are exempt from that 10-year rule and may instead stretch distributions over their own life expectancy.

Opening a Roth IRA for a Child

A minor can hold a Roth IRA, but only up to the amount of their own earned income, and passive income like gifts or allowance does not count.

A custodial Roth IRA works like any other Roth account, except an adult opens and manages it on the child’s behalf. The federal earned-income requirement applies exactly the same way it does to an adult: the child must have taxable compensation, such as wages from a job, and the contribution cannot exceed the lesser of that earned income or the $7,500 annual limit. Passive income, including cash gifts, allowance, or interest and dividends the child did not earn, does not qualify as compensation for this purpose.

Control of a custodial Roth IRA transfers from the adult custodian to the child under state custodial law rather than under any federal tax rule, so the exact mechanics depend on where the account is opened. The federal earned-income and contribution-limit rules described above, not the custodial transfer itself, are what a reader can treat as settled.

Ready to open an account? Our step-by-step guide to opening a Roth IRA walks through the mechanical steps.

Frequently Asked Questions

What is a Roth IRA? A Roth IRA is a retirement account funded with after-tax money. Contributions grow tax-free, and qualified withdrawals in retirement, including all the growth, are never taxed.

How does a Roth IRA work? You contribute money you have already paid income tax on. The account grows without annual tax drag, and once a withdrawal meets the qualified-distribution test, none of it is taxed.

What are the Roth IRA rules? The core rules are the 2026 income phase-outs, the combined $7,500 (or $8,600 with the catch-up) contribution limit, the two distinct five-year clocks, and the ordering rule that pays out contributions first, then conversions, then earnings.

What are the Roth IRA contribution limits for 2026? $7,500 for savers under 50, and $8,600 for savers 50 and older, capped at your taxable compensation for the year.

What are the Roth IRA income limits for 2026? $153,000 to $168,000 for single and head of household filers, and $242,000 to $252,000 for married couples filing jointly. Direct contributions are unavailable above the top of the range.

What are the Roth IRA withdrawal rules? Contributions come out tax-free and penalty-free at any age. Earnings need a qualified distribution, meeting the five-year test plus one of four conditions, to come out tax-free.

This article is educational information, not individualized tax, legal, or financial advice. Always consult your own legal, financial, and tax professionals before opening or changing a retirement account.

By Tim Schmidt + Sean Webster Reviewed by Sean Webster