What is Roth IRA?
A Roth IRA is a retirement savings account that differs from many other retirement savings vehicles. Contributions are made with after-tax dollars, and qualified withdrawals are tax-free, assuming certain requirements are met.
While individuals of any age can contribute to a Roth IRA, income limits may affect your eligibility to contribute
Where Did the Term “Roth IRA” Come From?
Roth IRAs were named after former Delaware Senator William V. Roth Jr., who was instrumental in the legislation that established the account type in 1997. The legislation allowed individuals to contribute after-tax income to IRAs that could later provide tax-free withdrawals in retirement.
Senator Roth served 34 years in Congress, during which he chaired the Senate Finance Committee, the Governmental Affairs Committee and the Permanent Subcommittee on Investigations.[1]
Who Can Contribute to a Roth IRA?
It’s important to understand what a Roth IRA is, who should have one, and if it’s worth taking the time to utilize one, especially if you already have other retirement accounts. Starting with baseline information will help you begin to consider whether one might be right for you. The following are the 2026 contribution limits, income phase-outs and determines your eligibility:
| Filing status | Modified Adjusted Gross Income (MAGI) | Roth IRA Contribution Limit (2026) |
| Single, married filing separately (if you didn’t live with your spouse at any point during the year), or head of household | Less than $153,000 | $7,500 ($8,600 for those over age 50) |
| $153,000 or more but less than $168,000 | Reduced contribution based on your income | |
| $168,000 or more | $0 | |
| Married, filing jointly, surviving spouses | Less than $242,000 | $7,500 ($8,600 for those over age 50) |
| $242,000 or more but less than $252,000 | Reduced contribution based on your income | |
| $252,000 or more | $0 | |
| Married filing separately (if you lived with your spouse at any point during the year) | Less than $10,000 | Reduced contribution based on your income |
| $10,000 or more | $0 |
Table source: https://investor.vanguard.com/investor-resources-education/iras/roth-ira-income-limits
How Does a Roth IRA Compare to a Traditional IRA?
With a Traditional IRA, tax benefits may come today, while a Roth IRA offers the potential for tax benefits later.
Because Roth IRA contributions are made with after-tax dollars, your money has the potential to grow tax-free over time. And unlike Traditional IRAs, where required minimum distributions (RMDs) generally begin at age 73, Roth IRAs aren’t subject to RMDs during the original account owner’s lifetime. This can provide greater flexibility in how and when you use your retirement savings.
If you need to access your money, Roth IRA contributions can generally be withdrawn at any time without taxes or penalties. Investment earnings, however, are subject to additional requirements. To qualify for tax-free withdrawals, distributions of earnings generally must satisfy the five-year holding period and other applicable IRS rules.
What Are the 2026 Roth IRA Income Phase-Outs?
Income phase-outs are different from contribution limits. Your income determines your eligibility and whether you can contribute the maximum annual amount or a reduced amount. These limits are based on your income range and help determine whether you’re eligible to contribute to a Roth IRA.
More specifically, Roth IRA income phase-out limits are based on a person’s Modified Adjusted Gross Income (MAGI) and tax filing status. If your MAGI falls below the phase-out threshold, you can typically contribute up to the maximum annual amount. If it falls within the phase-out range, the maximum amount you can contribute will gradually decrease. And if your MAGI is above the phase-out range, you may not be eligible to contribute to a Roth IRA for that tax year.
Below are the current 2026 income phase-out ranges:
| Filing status | 2026 income range |
| Single | $153,000-$168,000 |
| Married, filing jointly | $242,000-$252,000 |
| Married, filing separately1 | $0–$10,000 |
Source: https://investor.vanguard.com/investor-resources-education/iras/roth-ira-income-limits
What Is a Roth Conversion, and How Does It Work?
If you own a Traditional IRA, you may be able to convert some or all of those assets to a Roth IRA. The amount converted is generally subject to federal income tax, but the conversion itself is not subject to the 10% early distribution penalty that may otherwise apply to distributions taken before age 59½.
However, additional rules may apply if you take a distribution from the Roth IRA within five years of the conversion.
Some situations when a Roth conversion may be worth considering include:
- When your income and taxes are relatively low, for example, in retirement
- During stressed markets when asset values are lower, lessening the tax liability from the conversion and allowing you to buy securities within the Roth IRA at much lower values, with the opportunity to capture subsequent appreciation
- When you have determined you have sufficient assets to fund your retirement without making withdrawals from your retirement accounts (which become mandatory at age 73 based on your birth year, for a traditional IRA)
What is a “Backdoor” Roth IRA?
Under current law, taxpayers with income (in 2026) of at least $168,000 ($252,000 if married) are prohibited from contributing to a Roth IRA. “Backdoor” and “mega backdoor” Roth contributions are strategies that allow high earners to participate in Roth accounts or for people who have left their job and want to rollover their employer-sponsor 401k to a Roth IRA.
A “backdoor” Roth contribution strategy works as follows:
- Although higher earners (as defined above) are barred from contributing to a Roth IRA, they are allowed to convert traditional IRA assets into a Roth IRA.
- When converting traditional IRA assets into a Roth IRA, taxpayers owe tax on the gains that have accrued from their contributions.
- To avoid paying taxes on gains from converting traditional IRA assets into a Roth IRA, taxpayers can make contributions to their traditional IRA account and then immediately convert those funds into Roth IRAs, leaving no time for the money to grow and shielding future appreciation from future taxes.
There is also a “mega backdoor” conversion strategy applicable to workers who have employer-sponsored retirement plans that allow after-tax contributions and after-tax conversions to a Roth 401(k). If both these features are offered, participants can take full advantage of the $72,000 annual retirement savings plan contribution limit in 2026[2] (for both employee and employer contributions) by making after-tax contributions, and then converting those contributions to a Roth 401(k).
How Do I Know if a Roth IRA Right For Me?
Choosing between a Roth IRA and Traditional IRA isn’t always straightforward and in some cases, the answer may be both. Determining whether a Roth conversion or “backdoor” Roth strategy makes sense can add another layer of complexity.
Your financial and tax circumstances can help inform which approach may be appropriate for you. Reach out to our team to discuss your options. We can also coordinate with your accountant to help you evaluate the tax considerations and determine a path forward.
[1] Delaware Historical Society. (2022, October 11). Biography – Senator William V Roth – Delaware Historical Society. https://dehistory.org/collections/about-our-collections/senator-william-v-roth-collection/biography/
[2] Roth 401(k) contribution limits for 2025 and 2026. (2025, December 19). Fidelity. https://www.fidelity.com/learning-center/smart-money/roth-401k-contribution-limits
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