Individual Retirement Accounts (IRAs) are a popular way to save for retirement while getting potential tax benefits. The two most common types are Traditional IRAs and Roth IRAs, and each has different tax rules for contributions and withdrawals.
How do IRA contributions work?
Traditional IRA contributions
With a Traditional IRA, the money you contribute may be fully or partially tax-deductible, which can lower your taxable income.
If you or your spouse has a retirement plan at work, a phaseout range may apply. This means the deduction gradually decreases as your income increases and may be eliminated once you reach IRS income limits.
Roth IRA contributions
Roth IRA contributions aren’t tax-deductible, but they offer flexibility. You can contribute anytime from January 1 of the tax year through the filing deadline the following year.
For example, you can make 2026 Roth IRA contributions from January 1, 2026, through April 15, 2027.
What are the IRA contribution limits for 2026?
For tax year 2026, the contribution limits are:
Under age 50: $7,500
Age 50 or older: $8,600 (includes a $1,100 catch-up contribution)
These limits apply to your combined Traditional and Roth IRA contributions.
You can only contribute up to the amount of taxable compensation you have for the year, with special rules for married couples.
For example, if you earned $5,000, your maximum IRA contribution would generally be $5,000, even though the IRS limit is higher.
What are the benefits of each type of IRA?
Traditional IRA
Contributions may be tax-deductible in the year they’re made
Taxes on earnings are generally deferred until you withdraw the money
Withdrawals after age 59½ generally aren’t subject to early withdrawal penalties (but may be taxable)
Required minimum distributions (RMDs) generally begin at age 73 or 75, depending on your birth year
Roth IRA
Contributions are made with after-tax dollars, so there’s no upfront tax deduction.
Income limits apply, and higher earners may have their contribution amount reduced or eliminated
Original account owners aren’t required to take minimum distributions during their lifetime
Qualified withdrawals can be completely tax-free
Withdrawals are generally tax-free if:
You’ve had the Roth IRA for at least five tax years, and
One of the following applies:
You’re 59½ or older
You’re disabled
The withdrawal is made by your beneficiaries after your death
You meet the requirements for a qualified first-time home purchase (up to a $10,000 lifetime limit)
Are IRA management fees deductible?
No. IRA management fees aren’t deductible on your federal tax return.
How are IRA distributions taxed?
When you take money out of an IRA, some or all of the distribution may be taxable unless it’s a qualified Roth IRA withdrawal.
You’ll generally receive Form 1099-R for IRA distributions. This form shows how much you withdrew and may show the taxable amount.
Key takeaway
IRA rules depend on account type, age, income, and timing. Contribution limits are set annually, and distribution rules differ between Traditional and Roth IRAs.
This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.
Any third-party links are provided for informational purposes only. The third parties and their sites are not endorsed by April and April is not responsible for, and has no control over, their content, privacy policies, or terms of service.