Key takeaways: For 2026 you can put up to $7,500 into IRAs combined ($8,600 if you are 50 or older). A Roth IRA is funded with after-tax money and grows tax-free; a traditional IRA may give you a tax deduction now but you pay tax on withdrawals. Roth eligibility phases out at higher incomes.
A friend of mine, who I will call Marcus, is 29 and works as a software tester in Austin. For years he told himself he would “figure out retirement later.” What finally moved him was a simple question from his sister: “Do you want to pay taxes on this money now, or in 35 years?” That question is, honestly, the whole Roth versus traditional debate.
The 2026 numbers
| Item | 2026 |
|---|---|
| Combined IRA contribution limit | $7,500 |
| Catch-up if age 50+ | +$1,100 ($8,600 total) |
| Roth income phase-out, single | $153,000–$168,000 MAGI |
| Roth income phase-out, married filing jointly | $242,000–$252,000 MAGI |
The $7,500 is a combined limit across all your traditional and Roth IRAs, and you cannot contribute more than your taxable compensation for the year. The IRS confirms the limit on its IRA contribution limits page. You generally have until the tax filing deadline of the following year (usually April 15) to make a contribution for a given year.
Roth IRA: tax now, free later
You contribute money you have already paid tax on. In retirement, qualified withdrawals are tax-free. This tends to suit people who expect to be in a higher tax bracket later, or who value having tax-free money to draw on. Your contributions (not earnings) can be withdrawn at any time without tax or penalty, which gives some flexibility.
Traditional IRA: deduction now, tax later
You may be able to deduct contributions, lowering this year’s tax bill, but withdrawals in retirement are taxed as ordinary income. Whether the deduction is available depends on your income and whether you or your spouse have a workplace retirement plan, so check IRS rules or ask a tax professional.
How to choose
- Early in your career, lower bracket: Roth often makes sense.
- Peak earning years, high bracket: a deduction today can be worth more.
- Not sure: splitting contributions between the two is allowed, within the combined limit.
- Over the Roth income limit: a traditional IRA is still available; some people use a “backdoor Roth,” which has tax-rule traps, so get professional advice first.
Marcus’s version
Marcus opened a Roth IRA at a major brokerage in about twenty minutes, set up $200 a month automatically, and picked a low-cost target-date fund. He is not trying to beat the market. He is simply making sure that future-Marcus has tax-free money. That autopilot approach is, for most people, better than any clever strategy.
How to open one
- Choose a brokerage or bank that offers IRAs.
- Pick Roth or traditional.
- Link your bank account.
- Choose an investment (an IRA is an account type, not an investment).
- Automate contributions.
FAQ
Can I have both a Roth and a traditional IRA?
Yes, but the combined contribution limit applies.
What if I overcontribute?
Excess contributions can trigger a 6% tax unless removed by your return’s due date, including extensions.
General information, not personalized investment or tax advice. Marcus is an illustrative example. Investing involves risk.
