Updated October 2026. General information for US readers, not personalized financial, tax, insurance or legal advice.
An IRA (individual retirement account) lets you invest for retirement with tax breaks. The two main types, Roth and traditional, give you the tax break at different times. The IRS raised the contribution limits for 2026, so it’s a good time to pick the right one.
Key takeaways
- The 2026 IRA contribution limit is $7,500, plus a $1,100 catch-up if you’re 50 or older.
- Traditional IRA: possible tax deduction now, taxes when you withdraw.
- Roth IRA: no deduction now, tax-free withdrawals in retirement if rules are met.
- Roth eligibility phases out at higher incomes.
2026 IRA Limits at a Glance
| Limit | 2026 amount |
|---|---|
| IRA contribution limit | $7,500 (up from $7,000) |
| Catch-up, age 50+ | $1,100 extra (total $8,600) |
| Roth IRA phase-out, single or head of household | $153,000 to $168,000 |
| Roth IRA phase-out, married filing jointly | $242,000 to $252,000 |
| Traditional IRA deduction phase-out, single, covered by a workplace plan | $81,000 to $91,000 |
| Traditional IRA deduction phase-out, married filing jointly, contributing spouse covered by a workplace plan | $129,000 to $149,000 |
| 401(k) employee contribution limit | $24,500 (catch-up $8,000 at 50+; $11,250 at ages 60–63) |
Source: IRS, November 2025. Income figures are modified adjusted gross income.
How a Traditional IRA Works
You may be able to deduct your contributions on this year’s tax return, which lowers your tax bill now. Your money grows tax-deferred, and you pay income tax when you withdraw it in retirement.
Anyone with earned income can contribute. Whether you can deduct it depends on your income and whether you or your spouse have a retirement plan at work, as shown in the table above. If neither of you has a workplace plan, the deduction isn’t limited by income.
How a Roth IRA Works
You contribute money you’ve already paid tax on, so there’s no deduction now. In return, qualified withdrawals in retirement, including all the growth, are tax-free. You can also take out your original contributions (not earnings) at any time without tax or penalty.
You can contribute the full amount only if your income is below the phase-out range. Inside the range, your limit shrinks; above it, you can’t contribute directly.
Roth vs. Traditional: Side by Side
| Traditional IRA | Roth IRA | |
|---|---|---|
| Tax break | Possible deduction now | Tax-free qualified withdrawals later |
| Income limit to contribute | None | Phases out at higher incomes |
| Taxes on withdrawals | Taxed as income | Tax-free if rules are met |
| Early access | Taxes and usually a 10% penalty before 59½, with exceptions | Contributions can be withdrawn anytime |
| Required withdrawals | Yes, starting in your 70s | Not for the original owner |
Which One Should You Choose?
A Roth IRA often fits if you expect your tax rate to be the same or higher in retirement, which is common for students and early-career workers. It also gives more flexibility, since contributions can be withdrawn.
A traditional IRA often fits if you’re in a high tax bracket now and expect a lower one in retirement, and you qualify for the deduction.
You don’t have to pick only one. You can split contributions between both types, as long as the total stays within the $7,500 limit (or $8,600 at 50+).
How to Open an IRA
- Choose a provider, such as a brokerage, bank or robo-advisor. Compare fees and investment choices.
- Open a Roth or traditional IRA online.
- Fund it by transfer or automatic monthly contributions.
- Invest the money. Cash sitting in an IRA doesn’t grow much until you choose investments, such as low-cost index funds.
Frequently Asked Questions
What’s the deadline for 2026 IRA contributions?
You can generally contribute for a tax year up until that year’s tax filing deadline, usually mid-April of the following year.
Can I have a 401(k) and an IRA?
Yes. A workplace plan doesn’t stop you from contributing to an IRA, but it can limit whether you can deduct traditional IRA contributions.
What if my income is too high for a Roth?
Some high earners use a “backdoor Roth,” contributing to a traditional IRA and converting it. The tax rules are complex, so talk to a tax professional first.
Related Guides
Source: IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500.