Roth IRA

A Roth IRA is an individual retirement account you fund with money you have already paid income tax on. There is no deduction, but qualified withdrawals, including earnings, are free of federal income tax. A withdrawal is generally qualified once you are 59 and a half and five years past your first Roth IRA contribution. Take earnings out sooner and they can be taxed and penalized 10 percent.

Contributing generally requires taxable pay, and at higher incomes the amount allowed phases out to zero: for 2026, between $153,000 and $168,000 of income for single filers, and between $242,000 and $252,000 for married couples filing jointly. For 2026, the total across all your IRAs is $7,500, or your pay for the year if that is less, plus $1,100 if you are 50 or older. Whatever you hold inside can lose value.