Roth contributions in 2026: What investors should know
“Roth” can refer to a Roth IRA or a Roth feature within a workplace retirement plan. Both may provide potentially tax-free retirement income, but their rules differ.
1️⃣ Roth IRA contribution limits
For 2026, the combined limit across traditional and Roth IRAs is:
• $7,500 if under age 50
• $8,600 if age 50 or older
• Your taxable compensation, if lower
This is a combined limit. If someone under 50 contributes $3,000 to a traditional IRA, no more than $4,500 generally remains available for a Roth IRA.
2️⃣ Income limits for direct contributions
Eligibility is based on filing status and modified adjusted gross income:
• Single and head-of-household: $153,000 to $168,000 phaseout
• Married filing jointly: $242,000 to $252,000 phaseout
• Married filing separately after living with a spouse: $0 to $10,000 phaseout
Within these ranges, the permitted contribution is reduced. Above them, a direct contribution is generally unavailable.
3️⃣ Eligible compensation is required
Contributions cannot exceed eligible compensation, which generally includes wages, bonuses, professional fees, and self-employment income. Couples filing jointly may be able to fund an IRA for a spouse with little or no compensation if they have sufficient combined compensation. There is no maximum contribution age. Participation in a workplace retirement plan does not automatically prevent a Roth IRA contribution.
4️⃣ What if income exceeds the limit?
Some taxpayers consider a backdoor Roth IRA strategy:
1. Make a nondeductible traditional IRA contribution.
2. Convert eligible assets to a Roth IRA.
3. Properly report the contribution and conversion, generally using Form 8606.
A backdoor Roth is not automatically tax-free. Pre-tax assets in traditional, SEP, and SIMPLE IRAs may affect the taxable portion under the pro-rata rule. Investment growth before conversion may also be taxable. Careful analysis and recordkeeping are important*.
The converted amount is treated as taxable income and may affect your tax bracket. Federal, state, and local taxes may apply. If you’re required to take a minimum distribution in the year of conversion, it must be completed before converting.
To qualify for tax-free withdrawals, you must generally be age 59½ and hold the converted funds in the Roth IRA for at least five years. Each conversion has its own five-year period, and early withdrawals may be subject to a 10% penalty unless an exception applies. Income limits still apply for future direct Roth IRA contributions.
The converted amount is treated as taxable income and may affect your tax bracket. Federal, state, and local taxes may apply. If you’re required to take a minimum distribution in the year of conversion, it must be completed before converting.
To qualify for tax-free withdrawals, you must generally be age 59½ and hold the converted funds in the Roth IRA for at least five years. Each conversion has its own five-year period, and early withdrawals may be subject to a 10% penalty unless an exception applies. Income limits still apply for future direct Roth IRA contributions.
5️⃣ Watch for excess contributions
A bonus or business-income change may unexpectedly reduce Roth IRA eligibility. Excess contributions may face a 6% annual excise tax while uncorrected.
6️⃣ Roth IRA and Roth 401(k) rules differ
Roth IRAs have income limits. Workplace Roth contributions generally do not, but they follow the employer plan’s rules.
For 2026, the employee contribution limit for most 401(k), 403(b), and governmental 457 plans is $24,500, separate from the IRA limit.
The larger question is: How should I balance taxable, tax-deferred, and potentially tax-free accounts based on my current tax rate, expected future income, retirement goals, and estate plan?
Content is educational and is not individualized tax, legal, or investment advice. Tax laws are complex and subject to change. Consult qualified tax and financial professionals before contributing, converting assets, or correcting an excess contribution.
*The converted amount is treated as taxable income and may affect your tax bracket. Federal, state, and local taxes may apply. If you’re required to take a minimum distribution in the year of conversion, it must be completed before converting. To qualify for tax-free withdrawals, you must generally be age 59½ and hold the converted funds in the Roth IRA for at least five years. Each conversion has its own five-year period, and early withdrawals may be subject to a 10% penalty unless an exception applies. Income limits still apply for future direct Roth IRA contributions.