Roth IRA: rules and how to contribute

A Roth IRA is a type of individual retirement account intended to help save for retirement as well as reduce taxes in retirement. Because of this tax advantage, it’s generally ideal for people who expect to be in a higher tax bracket in the future.

Here’s how a Roth IRA works:

Contributions. You contribute to a Roth IRA using money that you have already paid taxes on. Unlike a traditional IRA, there is no tax deduction for a Roth IRA contribution.
Investments. After contributing, you decide how you want to invest the money. These investments may include stocks, mutual funds, exchange-traded funds, bonds, or more, depending on where you open your Roth IRA. Over time, the investments in your Roth IRA could earn a return, growing tax-free.
Withdrawals. You can withdraw Roth IRA contributions at any time. But earnings, or the money made on the investments, can only be withdrawn tax-free at age 59 ½ and as long as the account has been open for five years.

Traditional IRAs have a different tax treatment to Roth IRAs. Tap to see more differences.

	Roth IRA	Traditional IRA
Tax treatment	Contributions are made with after-tax dollars; qualified withdrawals in retirement are tax-free.	Contributions may be tax-deductible; withdrawals in retirement are taxed as ordinary income.
Income limits	Eligibility to contribute phases out at higher income levels.	No income limit to contribute, but tax deductibility depends on annual income and participation in an employer-sponsored retirement plan.
Required minimum distributions	No RMDs during the account holder’s lifetime.	RMDs are required starting at age 73. In 2033, the age increases to 75.

You can contribute to a Roth IRA by depositing earned income, such as money earned through a job or a spousal contribution. These are also called direct contributions, and there are limits to how much you can add every year. The contribution limit is $7,000 for 2025 ($8,000 if aged 50 and older). For 2026, the limit is $7,500 ($8,600 if aged 50 and older).

Other ways to add money to your Roth IRA include rolling money over from a 401(k) to a Roth IRA or by converting an existing IRA or other type of retirement plan to a Roth IRA. There is no cap on rollovers or conversions. They also don’t count toward your annual contribution limit .

Table of Contents

Investment details

Tax filing status

Roth IRAStandard Taxable Account

Roth IRA investment choices

Choosing the investments is a key step in managing your Roth IRA. If you don’t do this, the money you contribute won’t have the chance to grow.

The most common allowable investments in a Roth IRA include:

Stocks: Individual company shares.
Bonds: Government, municipal and corporate bonds.
Mutual funds: Actively or passively managed pools of various investments.
Exchange-traded funds (ETFs): Diversified, low-cost funds traded like stocks.
Index funds: Funds tracking specific market indexes.
Certificates of deposit (CDs): Fixed-income investments from banks.

Roth IRA eligibility rules

How much you make in a year and your filing status determines how much you can contribute to your Roth IRA.

2025 Roth IRA eligibility rules

🤓 Nerdy Tip

You have until April 15, 2026, to contribute to an IRA for 2025.

For 2025, if your modified adjusted gross income (MAGI) is below $150,000 (single filers) or below $236,000 (married filing jointly), you can contribute the full amount the IRS allows to a Roth IRA. At higher incomes, the amount you can contribute becomes smaller until you are no longer eligible.

2025 filing status	Annual Roth IRA income thresholds and phaseouts
Single, head of household or married filing separately (if you didn’t live with spouse during the year)	Full contribution: Less than $150,000. Partial contribution: Between $150,000 and $165,000. No Contribution: $165,000 or more.
Married filing jointly or surviving spouse	Full contribution: Less than $236,000. Partial contribution: Between $236,000 and $246,000. No Contribution: $246,000 or more.
Married filing separately (if you lived with spouse at any time during the year)	Partial contribution: Less than $10,000. No contribution: $10,000 or more.

2025 filing status

Annual Roth IRA income thresholds and phaseouts

Single, head of household or married filing separately (if you didn’t live with spouse during the year)

Full contribution: Less than $150,000.

Partial contribution: Between $150,000 and $165,000.

No Contribution: $165,000 or more.

Married filing jointly or surviving spouse

Full contribution: Less than $236,000.

Partial contribution: Between $236,000 and $246,000.

No Contribution: $246,000 or more.

Married filing separately (if you lived with spouse at any time during the year)

Partial contribution: Less than $10,000.

No contribution: $10,000 or more.

2026 Roth IRA eligibility rules

In 2026, if your MAGI is less than $153,000 as a single filer or $242,000 as married filing jointly, you can make the full Roth IRA contribution.

2026 filing status	Annual Roth IRA income thresholds and phaseouts
Single, head of household or married filing separately (if you didn’t live with spouse during the year)	Full contribution: Less than $153,000. Partial contribution: Between $153,000 and $168,000. No Contribution: $168,000 or more.
Married filing jointly or surviving spouse	Full contribution: Less than $242,000. Partial contribution: Between $242,000 and $252,000. No Contribution: $252,000 or more.
Married filing separately (if you lived with spouse at any time during the year)	Partial contribution: Less than $10,000. No contribution: $10,000 or more.

2026 filing status

Annual Roth IRA income thresholds and phaseouts

Single, head of household or married filing separately (if you didn’t live with spouse during the year)

Full contribution: Less than $153,000.

Partial contribution: Between $153,000 and $168,000.

No Contribution: $168,000 or more.

Married filing jointly or surviving spouse

Full contribution: Less than $242,000.

Partial contribution: Between $242,000 and $252,000.

No Contribution: $252,000 or more.

Married filing separately (if you lived with spouse at any time during the year)

Partial contribution: Less than $10,000.

No contribution: $10,000 or more.

💡 Don’t qualify for a Roth IRA contribution?

High earners could explore a backdoor Roth IRA to convert funds from a traditional IRA to a Roth, or a mega backdoor Roth to convert from a 401(k) plan to a Roth IRA (if your plan allows).

What types of Roth IRAs can you have?

Spousal Roth IRAs. A spousal Roth IRA is a Roth IRA held in the name of a married individual with little to no earned income. Contributions come from the working spouse’s income. This account follows the same tax treatment and eligibility requirements as a normal Roth IRA.

Inherited Roth IRAs. An inherited Roth IRA is a Roth IRA that’s been inherited by the beneficiary after the original account owner dies. Beneficiaries of a Roth IRA are subject to unique rules, such as being subject to required minimum distributions (RMDs) .

Rollover Roth IRAs. A rollover Roth IRA refers to a transfer of funds from an employer-sponsored account, such as a 401(k), to a Roth IRA. This is often an option for people who leave their jobs and want to move the funds out of their employer-sponsored plan. It also can be done by high earners who aren’t able to contribute directly to a Roth IRA due to the income limit (a strategy also known as a mega backdoor Roth).

Custodial Roth IRAs. A custodial Roth IRA is a retirement account owned by a minor but managed by an adult custodian until the minor reaches adulthood. There is no age limit for a custodial Roth IRA, but the minor must have a form of earned income.

Roth IRA withdrawal rules

With a Roth IRA, you can withdraw your original contributions whenever you want . You won’t owe any penalties or taxes, no matter how long your account has been open. That’s because the money you put in is money you’ve already paid income tax on. When you withdraw money from a Roth IRA, the IRS always assumes your original contributions come out first.

If you’re withdrawing investment earnings, on the other hand, those withdrawals can fall under one of two categories:

Qualified distributions. A qualified distribution from a Roth IRA is any withdrawal made without taxes or penalties.
Nonqualified distributions: A nonqualified distribution from a Roth IRA is a withdrawal of investment earnings that incurs taxes, penalties or both.

The five-year rule is a guideline that determines when account holders can withdraw earnings from their Roth IRA accounts without incurring taxes or penalties. Typically, the account needs to be open for five years — and the account holder must reach age 59 ½ — before earnings can be withdrawn without taxes and penalties. However, there are also specific five-year rules for Roth IRA conversions, inherited Roth IRAs and more .

The biggest difference between a Roth IRA and a traditional IRA is their tax treatment. Many people have both types of IRAs as part of their retirement planning. You can also contribute to both in the same year as long as you qualify and don’t exceed the annual contribution limit. (See the full comparison of Roth vs. traditional IRAs).

Benefits and drawbacks of a Roth IRA

What makes a Roth IRA so attractive to investors is the potential tax savings:

Long-term financial planning. If you think you’ll be in a higher tax bracket when you retire than you are now, a Roth IRA may be more beneficial than a traditional IRA for long-term financial planning. The reason: You’ve already paid taxes on your contributions, so your withdrawals won’t result in extra taxes when it’s time to enjoy your hard-earned money.
Rising inflation. Inflation erodes the value of money over time. Giving your money an opportunity to grow tax-free can be extra lucrative when inflation is high.

There are a few drawbacks to a Roth IRA:

Five-year wait to withdraw earnings. If you are close to retirement, waiting five years to withdraw the earnings from your first Roth IRA contribution could be a drawback. Ignoring this rule could result in paying income taxes and a 10% penalty.
No tax deductions. You also aren’t eligible for any tax deductions during the year you contribute, unlike with a traditional IRA. Tax deductions are helpful, as they can reduce your adjusted gross income and your overall tax bill for the year you contribute. You may qualify to claim the saver’s credit, which is a tax credit you get for making eligible contributions to an IRA. Keep in mind that the credit has income restrictions.
Income limits. Roth IRAs have income limits, unlike traditional IRAs. If you make more than the allowed amount, you may not qualify for a Roth IRA.

See where you stand compared to households like yours, and get steps you could take to grow from here.

NWWP is an SEC-registered investment adviser. Registration does not imply skill or training. Calculator by NerdWallet, Inc., an affiliate, for informational purposes only.

Frequently asked questions

Should you contribute to a 401(k) or a Roth IRA?

You don’t have to choose. As long as you’re eligible for a Roth IRA, you can contribute to that alongside an employer-sponsored retirement plan like a 401(k). This route does require having enough money to contribute to both, which isn’t always possible. If you need to choose one place to direct your dollars, read our comparison of 401(k)s vs. IRAs.

Can you lose money in a Roth IRA?

Yes. You can put your Roth IRA money in a variety of investments. Some of those investments may lose value, especially in the short term. It’s important to understand your risk tolerance when choosing investments.

When should I contribute to my Roth IRA?

Your eligibility and contribution amount to a Roth IRA depends on your income amount. Occasionally, receiving a salary increase or bonus might push you into a higher income bracket. This could affect how much you can contribute to your Roth IRA or if you can contribute at all. Depending on your circumstances, you can make contributions to your Roth IRA in incremental payments or pay a lump sum closer to the tax deadline.

If you accidentally overcontributed to a Roth IRA, you can withdraw the money to potentially avoid penalties and taxes.

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Investment details

Roth IRA investment choices