The Roth IRA is the mirror image of the traditional IRA. You contribute money you have already paid tax on, so there is no deduction today. In exchange, you never pay tax on it again. The growth is tax-free, and qualified withdrawals in retirement are tax-free. For a young investor with decades of compounding ahead, locking in today’s tax rate and letting the gains escape tax entirely is one of the most powerful moves available.
The 2026 numbers
The Roth IRA shares its contribution limit with the traditional IRA: $7,500 for 2026, plus a $1,100 catch-up at 50 or older. That is a combined limit across both account types, not $7,500 each.
The catch is income. The ability to contribute directly to a Roth IRA phases out over a range of modified adjusted gross income. For 2026, that range is $153,000 to $168,000 for single filers and $242,000 to $252,000 for married couples filing jointly. Below the range you can contribute the full amount, within it you can contribute a reduced amount, and above it you cannot contribute directly at all.
Why the tax-free part matters so much
Consider $7,500 growing at 7 percent for 35 years. It becomes roughly $80,000. In a traditional account, that entire balance is taxable on withdrawal. In a Roth, all of it, including the roughly $72,500 of pure growth, comes out tax-free. The longer the horizon, the larger the untaxed gain, which is exactly why the Roth is so often recommended for younger savers whose contributions have the most time to compound.
There is also unusual flexibility. Because you already paid tax on your contributions, you can withdraw the amount you contributed (not the growth) at any time, without tax or penalty. That makes the Roth a surprisingly gentle place to hold long-term money you might, in an emergency, need to reach. The growth has stricter rules: generally you need to be 59 and a half and have had a Roth open for five years for earnings to come out tax-free.
The backdoor for high earners
If your income is above the phase-out, the direct Roth door is closed, but a side entrance exists. You can contribute to a non-deductible traditional IRA, which has no income limit, and then convert it to a Roth. This “backdoor Roth” is a well-worn path, though it has moving parts, particularly the pro-rata rule if you hold other pre-tax IRA money, so it is worth understanding fully before you use it.
To see whether you can contribute to a Roth for 2026 given your income, and how much, run the 2026 contribution room calculator.
Sources: IRS — Roth IRAs and IRS — cost-of-living adjustments for retirement items.