Quick answer: For 2026 you can put up to $7,500 into IRAs combined ($8,600 if you are 50 or older). A Roth uses after-tax money and grows tax-free; a traditional IRA may give you a deduction now, but withdrawals are taxed.
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 Your contributions (not earnings) can be withdrawn at any time without tax or penalty, which gives some flexibility.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.
Roth vs. traditional IRA side by side
| Feature | Roth IRA | Traditional IRA |
|---|---|---|
| Tax break | Later: qualified withdrawals are tax-free | Now: contributions may be deductible |
| Withdrawals in retirement | Tax-free if qualified | Taxed as ordinary income |
| Required minimum distributions | None while the owner is alive | Generally start at age 73 |
| Income limit to contribute | Yes: phases out at $153,000–$168,000 (single) for 2026 | No limit to contribute; the deduction can phase out |
| 2026 contribution limit | $7,500 combined ($8,600 if 50 or older) | |
| Early access | Your contributions can come out anytime | Withdrawals before 59½ usually owe a 10% additional tax |
Source: IRS. The RMD rule for Roth IRAs applies to the owner. Beneficiaries who inherit a Roth IRA do have RMD rules.
Can you deduct a traditional IRA in 2026?
If neither you nor your spouse has a retirement plan at work, you can deduct the full amount at any income. If one of you does, the deduction shrinks inside these 2026 ranges, per the IRS:
| Your situation | 2026 deduction phase-out (MAGI) |
|---|---|
| Single, covered by a workplace plan | $81,000–$91,000 |
| Married filing jointly, you are covered | $129,000–$149,000 |
| Married filing jointly, you are not covered but your spouse is | $242,000–$252,000 |
| Married filing separately, covered | $0–$10,000 |
Above the top of your range, you can still put money in a traditional IRA. You just get no deduction. For many people in that spot, a Roth (if eligible) is the cleaner choice.
Which IRA fits you?
| If this sounds like you | Usually a better fit | Why |
|---|---|---|
| In your 20s or early 30s, modest income | Roth | Low tax rate today; decades of tax-free growth |
| High earner with a 401(k), over the deduction range | Roth if under the Roth limit | A traditional IRA would give no deduction |
| Peak earning years, no workplace plan | Traditional | Full deduction at any income; big tax savings now |
| Expect a lower income in retirement | Traditional | Deduct at a high rate, pay tax later at a lower one |
| Want to leave money to kids | Roth | No RMDs for you; heirs can get tax-free money |
| Really can’t guess | Split it | Tax diversity, within the $7,500 combined limit |
Also read: Do a tax withholding checkup before year-end. A traditional IRA deduction can change what you owe in April.
Withdrawal rules in plain English
A Roth withdrawal is fully tax-free when it is a “qualified distribution.” IRS Publication 590-B says that takes two things:
- The 5-year rule: five years have passed since the first tax year you contributed to any Roth IRA.
- A qualifying reason: you are 59½ or older, you are disabled, the money goes to a beneficiary after death, or it is for a first home (up to $10,000 lifetime).
The 5-year clock starts on Jan. 1 of the tax year you first contribute for. A 2026 contribution made in April 2027 still starts the clock on Jan. 1, 2026.
For a traditional IRA, withdrawals are taxable. Before 59½, you usually owe an extra 10% additional tax unless an exception applies. The IRS says there is no special exception just for hardship.
Common exceptions include total disability, a terminal illness, a first home (up to $10,000), substantially equal periodic payments and some unreimbursed medical bills.
Lower income? The Saver’s Credit pays you to save
The Saver’s Credit is 10%, 20% or 50% of up to $2,000 you put into an IRA or workplace plan ($4,000 if married filing jointly). That is a credit of up to $1,000 ($2,000 for couples).
| Filing status | 2026 income limit (AGI) |
|---|---|
| Married filing jointly | $80,500 |
| Head of household | $60,375 |
| Single or married filing separately | $40,250 |
Claim it with IRS Form 8880. Rollovers don’t count, and recent withdrawals can reduce the credit.
Key dates for 2026 contributions
- Now through Dec. 31, 2026: contribute and set up automatic monthly deposits. $625 a month reaches the $7,500 limit.
- Through the April 2027 filing deadline: you can still make a 2026 contribution. Tell your brokerage which year it is for.
- By your return’s due date, including extensions: pull out any excess to avoid the 6% tax each year.
What steady saving can add up to (an illustration)
This is math, not a forecast. Markets go up and down, and no return is guaranteed. The table assumes a steady 6% yearly return with a deposit at the end of each year.
| Yearly deposit | After 10 years | After 20 years | After 30 years |
|---|---|---|---|
| $2,400 ($200 a month) | about $31,600 | about $88,300 | about $189,700 |
| $7,500 (the 2026 max) | about $98,900 | about $275,900 | about $592,900 |
In a Roth, qualified withdrawals of that whole balance are tax-free. In a traditional IRA, withdrawals are taxed, but you may have saved tax on each deposit along the way.
Mistakes to avoid
- Leaving the money in cash. An IRA is just the account. If you never pick an investment, it may sit in a money market fund.
- Ignoring the Roth income limit. A raise or bonus can push your MAGI into the phase-out. Check before you contribute.
- Counting the limit per account. The $7,500 is for all your IRAs combined.
- Contributing more than you earned. You need taxable compensation at least equal to what you put in.
- Raiding the account early. Earnings pulled out of a Roth too soon can be taxed and hit with the 10% additional tax.
- Skipping the emergency fund. Build a cash cushion first so you don’t need to tap retirement money.
Recommended products for retirement planning
- The Bogleheads’ Guide to Investing — plain-English index fund basics
- The Simple Path to Wealth — a popular book on low-cost investing
- Monthly budget planner — find the $625 a month
- Fireproof document safe — keep account and beneficiary papers safe
Disclosure: As an Amazon Associate, Nexgen Headlines earns from qualifying purchases.
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.
Can I have a 401(k) and an IRA?
Yes. A workplace plan does not stop you from contributing to an IRA. It can limit your traditional IRA deduction, using the 2026 ranges above.
Is it too late to contribute for 2026?
No. You can make 2026 IRA contributions until your 2026 tax filing deadline in April 2027.
Can I still contribute after age 70½?
Yes. The IRS says you can contribute to a Roth IRA after age 70½, as long as you have taxable compensation.
General information, not personalized investment or tax advice. Marcus is an illustrative example. Investing involves risk.
The bottom line
Pay tax now with a Roth if your rate is low today or you want tax-free money later. Take the deduction with a traditional IRA if your rate is high now and you qualify. Either way, the biggest win is starting and automating it.
Last reviewed: Oct. 23, 2026.
Sources: IRS, 2026 limits news release; IRS, Roth IRAs; IRS Publication 590-B; IRS, RMD FAQs; IRS, Saver’s Credit.
