Roth IRA
Last verified: 2026-07
Comparison
Annual Contribution7000
Tax‑free Growth95
Withdrawal Tax0
What Is a Roth IRA?
A Roth IRA is an individual retirement account that offers tax‑free growth and tax‑free withdrawals in retirement, provided certain conditions are met. You contribute after‑tax dollars, meaning you don’t get a tax deduction today, but all future earnings are yours to keep – completely tax‑free.
Key Rules
- Contribution limit: $7,000 per year (2026 limit, under age 50)
- Income limits: single filers with MAGI over $161,000 may be phased out
- Withdrawals: contributions can be taken out anytime tax‑ and penalty‑free; earnings after age 59½ and account open for 5 years are tax‑free
Why It’s So Powerful
If a 25‑year‑old invests $7,000 annually in a Roth IRA earning 8% until age 65, they’ll have over $1.8 million. And every single dollar can be spent tax‑free in retirement.
Last verified: July 2026