Roth IRA
Pay the tax now, on a smaller number, so you never have to pay it again on whatever that money grows into — that’s the entire bet a Roth IRA is making.
What Is It
A Roth IRA is funded with money you’ve already paid income tax on, but in exchange, both the growth and the withdrawals in retirement are completely tax-free, as long as you follow the withdrawal rules. It’s the mirror image of a Traditional IRA, which gives you the tax break now instead of later.
Still deciding between the two? The Roth vs. Traditional Calculator can help you figure out which fits your situation better.
Why It Matters
For 2026, you can contribute the full $7,500 ($8,600 if 50+) only if your income is below $153,000 (single) or $242,000 (married filing jointly) — above those thresholds the amount you’re allowed to contribute phases down, and disappears entirely above $168,000 single / $252,000 joint. Unlike Traditional IRAs and 401(k)s, Roth IRAs have no required minimum distributions during the original owner’s lifetime — the money can keep growing tax-free for as long as you leave it alone.
See exactly what you’re allowed to contribute if you fall inside that phase-out range:
Quick Example
Invest $7,500 a year in a Roth IRA starting at 30, growing at 7% a year until 65: that’s roughly $1,050,000 — and every dollar of it comes out completely tax-free in retirement, since you already paid tax on the money going in.
Try It Yourself
See what your own Roth contributions could grow into — tax-free, by the time you actually need it.
↗ retiresmart.borrowingbetter.com 🔥RetireSmart — Retirement Calculator
See what consistent Roth contributions compound into — fully tax-free — over your own timeline.