What is a Roth IRA?

Open a Roth IRA and take advantage of after-tax benefits as you save for retirement.

A Roth IRA is an Individual Retirement Account to which you contribute after-tax dollars.

A Roth IRA is an Individual Retirement Account to which you contribute after-tax dollars. While there are no current-year tax benefits, your contributions and earnings can grow tax-free, and you can withdraw them tax- and penalty-free after age 59½ and once the account has been open for five years. Other advantages of having a Roth IRA include:

  • No contribution age restrictions. Unlike a Traditional IRA, you don’t have to stop contributing after age 70½, as long as you still have a qualifying earned income.
  • No Required Minimum Distributions (RMDs). There are no mandatory withdrawals, allowing your savings to continue to grow even during retirement.
  • No income taxes for inherited Roth IRAs. If you pass your Roth IRA onto your heirs, their withdrawals will also be income tax-free. 

A Roth IRA can be a good savings option for those who expect to be in a higher tax bracket in the future, making tax-free withdrawals even more advantageous. However, there are income limitations to open a Roth IRA, so not everyone will be eligible for this type of retirement account.

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Roth IRA contribution limits

  • Roth IRA contribution limits

    See if you're eligible to open a Roth IRA and how much you can contribute based on your earned income. Current contribution limits, even if you’re already covered by an employer-sponsored plan:

    • $6,000 in you’re under age 50
    • $7,000 if you’re age 50 or older

    See contribution limits chart

  • Is converting to a Roth IRA right for you?

    Compare estimated values of keeping a Traditional IRA vs. converting it to a Roth, and see estimated taxes.

    Learn about Roth IRA conversion

Your eligibility to open a Roth IRA and how much you can contribute is determined by your Modified Adjusted Gross Income (MAGI). If you are a single or joint filer, your max contribution starts to reduce at $120,000 and $189,000 for tax year 2018, and $122,000 and $193,000 for tax year 2019, respectively. See which IRAs you’re eligible for with our Roth vs. Traditional IRA Calculator

Compare different retirement accounts and learn their tax benefits and rules with our Roth IRA vs. Traditional IRA infographic.


Common questions

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This tax information is not intended to be a substitute

This tax information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner, or investment manager. Depending on the type of account you have, there are different rules for withdrawals, penalties, and distributions.  Please understand these before opening your account.
 


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