What is Roth IRA?

A <a href="/calculators/ira" class="text-blue-600 dark:text-blue-400 hover:text-blue-700 dark:hover:text-blue-300 hover:underline font-semibold transition-colors duration-200">Roth IRA</a> is a retirement account where you contribute after-tax dollars and withdraw tax-free in retirement. Unlike a traditional IRA, contributions to a Roth IRA are made with after-tax dollars, meaning they do not provide an immediate tax deduction. In exchange, the account grows entirely tax-free, and qualified distributions of both principal contributions and investment earnings are completely tax-free once the owner reaches age 59½ and meets the five-year holding rule.

Eligibility to contribute to a Roth IRA is subject to income phase-outs based on Modified Adjusted Gross Income (MAGI). For the 2026 tax year, the contribution phase-out range is $153,000 to $168,000 for single filers and $242,000 to $252,000 for married couples filing jointly (up from $150,000 to $165,000 and $236,000 to $246,000 in 2025 respectively). High earners whose income exceeds these limits cannot contribute directly, though they may utilize the <a href="/articles/backdoor-roth-ira-pro-rata-conversion-rules" class="text-blue-600 dark:text-blue-400 hover:text-blue-700 dark:hover:text-blue-300 hover:underline font-semibold transition-colors duration-200">backdoor Roth IRA</a> conversion strategy.

Roth IRAs offer unique flexibility: because contributions are made after-tax, the principal contribution amount can be withdrawn penalty-free and tax-free at any time. Furthermore, Roth IRAs are exempt from Required Minimum Distributions (RMDs) during the owner's lifetime, allowing assets to grow unchecked.