Roth IRA Contributions: 4 Things You Need to Know
While the tax benefits of a Roth IRA are generous (your money can grow tax-free, and you can withdraw earnings tax-free after age 59½ once you've had the account for at least five years), there are specific limitations to consider.
Here are four things to keep in mind about Roth IRA contribution limits and rules.
Which IRA is right for you?
1. Roth IRA contributions won't get you an up-front tax deduction
Because you contribute to a Roth with after-tax dollars (based on your wages), you won't get an immediate tax break like you might when contributing to a traditional IRA. However, you can withdraw contributions tax- and penalty-free any time or withdraw investment earnings later without owing tax as long as you follow IRS rules for qualified withdrawals.
Generally, contributing to a Roth account makes the most sense if you believe the tax rate you'll pay today will be lower than the tax rate you'll pay when withdrawing the money in retirement. If on the other hand you think your tax rate today will be higher than it'll be when you're in retirement, making tax-deferred contributions to a traditional IRA or 401(k) may be a better option. Consider speaking with a tax advisor about your personal situation to help you decide which account is better for you.
2. The maximum annual contribution is the same for Roth IRAs and traditional IRAs
The contribution limits for both Roth and traditional IRAs are the same. For 2025, each taxpayer is limited to a maximum contribution of $7,000 if you're under age 50 (up to $7,500 for 2026), with a catch-up contribution of $1,000 available to those ages 50 and older (up to $1,100 for 2026). To count toward the current year maximum, you must schedule your contributions before the annual tax-filing deadline if you want them to count for that year.
But beware—that contribution limit is a combined total, which means if you want to contribute to both a Roth and a traditional IRA, your total contributions can't exceed the annual per-person limit.
3. You must stay below the income limits to contribute to a Roth IRA
If you file taxes as a single person, your modified adjusted gross income (MAGI) for 2025 must be under $150,000 ($153,000 for 2026) to contribute the full amount to a Roth IRA. After crossing the income threshold, your maximum contribution phases out until you become ineligible once your MAGI hits $165,000 for 2025 ($168,000 for 2026).
Married couples filing jointly can contribute up to the maximum amount to a Roth IRA if your combined MAGI for 2025 is under $236,000 ($242,000 for 2026) with contribution limits phasing out until your income hits $246,0002025 ($252,000 for 2026).
4. You can contribute to a Roth IRA, even if you have an employer-sponsored plan
If you're still working and contributing to a workplace retirement plan—like a 401(k), 403(b), or 457—you can maximize your savings by also making contributions to a Roth IRA, so long as you don't exceed the income limits. If your employer-sponsored plan offers matching contributions, consider saving at least enough to get the full match first. After that, you may want to consider saving in a Roth IRA, assuming a Roth account makes more sense than the tax deduction offered by a tax-deferred account. However, if you have the ability, saving the maximum in both account types could be the best option—helping you potentially get the most out of your retirement savings.
Which IRA is right for you?
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This material is intended for general informational and educational purposes only. The investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic, or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.
This information is not a specific recommendation, individualized tax or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager, Estate Attorney) to help answer questions about specific situations or needs prior to taking any action based upon this information.
Withdrawals from an IRA prior to age 59½ may be subject to a 10% Federal tax penalty. For a Roth IRA, tax-free withdrawals of earnings are permitted five years after first contribution creating account. Earnings withdrawn prior to that may be subject to ordinary income taxes and a 10% Federal tax penalty.
Tax-free withdrawals of earnings are permitted five years after creating an account with the first contribution. Once the five-year requirement is met, distributions will be free from federal income taxes if taken: (1) after age 59½; (2) on account of disability or death; (3) to pay up to $10,000 of the expenses of purchasing a first home; or (4) to cover birth or adoption expenses of up to $5,000. Withdrawals that do not meet these qualifications will generally be subject to ordinary income taxes and a 10% federal tax penalty. However, certain distributions are not subject to the 10% federal tax penalty, but are subject to ordinary income taxes over one or more years, although such tax may be refunded if the distribution is repaid within three years: (1) a distribution of up to $22,000 due to a qualified federally declared disaster; (2) the lesser of $10,000 or 50% of the vested account balance to a domestic abuse victim; and (3) one emergency expense distribution per year up to the lesser of $1000 or the vested account balance minus $1000.
Investing involves risk including loss of principal.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.