Glossary·Written by a CPA
Roth IRA
A retirement account funded with after-tax money, where qualified withdrawals in retirement, including the growth, are tax-free.
A Roth IRA is an individual retirement account where you pay tax on the money now, before it goes in, and then the growth can come out tax-free later. All that I mean is you skip the tax break today in exchange for not paying tax on the gains down the road.
For 2026, you can contribute up to $7,500, or $8,600 if you're 50 or older, and you can't contribute more than your earned income for the year. You have until the tax filing deadline, which is usually mid-April of the next year, to make contributions for 2026.
There are income limits. For 2026, the amount you can contribute directly starts phasing out at a modified adjusted gross income of $153,000 for single filers and $242,000 for married couples filing jointly, and it's gone completely at $168,000 and $252,000.
For you, the money you contributed can generally be taken back out at any time without tax or penalty, but earnings are only tax-free and penalty-free in a qualified withdrawal, which usually means you're at least 59 and a half and the account has been open for five years, with some exceptions.
The catch. The $7,500 limit is shared across all your IRAs, so traditional and Roth IRA contributions together can't go over it for 2026.
Where I talk about it
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This is education, not tax or investment advice. I'm a CPA, but I'm not your CPA. Full disclaimer.