A Roth IRA flips the usual tax deal: you pay taxes on the money now, and qualified withdrawals in retirement come out tax-free.
How it works
You contribute money you’ve already paid income tax on, so there’s no deduction today. Your money grows, and in retirement, qualified withdrawals are completely tax-free, including all the growth. To be qualified, withdrawals generally must happen after age 59½ and at least five years after your first Roth contribution.
2026 contribution limits (IRS)
- $7,500 per person, plus a $1,100 catch-up if you’re 50 or older
- This limit is shared with any Traditional IRA contributions.
Income limits
Your ability to contribute directly phases out at higher incomes. In 2026, the phase-out range is:
- Single or head of household: $153,000 to $168,000
- Married filing jointly: $242,000 to $252,000
Higher earners sometimes use a strategy called a “backdoor Roth,” but it has tax rules that should be reviewed with a tax professional.
Why people love the Roth
- Tax-free income in retirement, which can help manage taxes on Social Security and Medicare premiums
- You can withdraw your contributions (not earnings) at any time without tax or penalty.
- No required minimum distributions for the original owner
- Can be a tax-efficient asset to pass on to heirs
Who it may suit
- Younger workers in lower tax brackets today
- Anyone who expects to be in a similar or higher tax bracket in retirement
- People who want tax diversification alongside a 401(k) or Traditional IRA
What to watch for
- No upfront tax deduction
- Earnings withdrawn early may be taxed and penalized.
- Income limits on direct contributions
- Investments can lose value.
Source: IRS, 2026 cost-of-living adjustments (IR-2025-111). For educational purposes only; not tax or investment advice. Workable Financial Solutions does not offer securities or investment advisory services. Consult a tax professional about your situation.