Adding A Roth IRA To Your Wealth Management Toolkit
A Roth IRA can be a valuable tax and estate planning account because contributions are made with after-tax dollars, qualified withdrawals may be tax-free, and original Roth IRA owners are not required to take required minimum distributions during their lifetime.
Watch: Roth IRA Conversion Strategy: Timing, Taxes & Estate Planning Benefits
The Differences Between A Traditional IRA And Roth IRA
Traditional IRAs and Roth IRAs are both individual retirement accounts, but they work differently. With a traditional IRA, contributions may be tax deductible depending on your income, tax filing status, and whether you or your spouse are covered by an employer-sponsored retirement plan. Withdrawals from a traditional IRA are generally taxed as ordinary income.
With a Roth IRA, contributions are not tax deductible. However, qualified withdrawals may be tax-free, and the original owner of a Roth IRA is not required to take distributions during their lifetime. These differences can make Roth IRAs especially useful for retirement income planning and estate planning.
The following answers to common IRA questions can help you understand the role traditional and Roth IRAs may play in your broader retirement and wealth management strategy.
Our Top 7 IRA Questions
1) Can I contribute to a traditional or Roth IRA account?
Traditional IRA
If you are single and under 50, you can contribute up to $7,500 to an IRA for 2026, or the amount of your earned income for the year, whichever is less.
Taxpayers who are married filing jointly may each contribute up to $7,500 per year, as long as the couple has enough earned income to support both contributions. For example, a married couple would generally need at least $15,000 in earned income to contribute the full $7,500 for each spouse.
The annual IRA contribution limit applies to your combined traditional IRA and Roth IRA contributions. In other words, you cannot contribute the full annual limit to a traditional IRA and then contribute the full annual limit again to a Roth IRA for the same tax year.
Traditional IRA contributions may not be fully tax deductible depending on your income level and whether you or your spouse are covered by an employer-sponsored retirement plan. For 2026, the traditional IRA deduction phases out for single taxpayers covered by a workplace retirement plan with income between $81,000 and $91,000. For married couples filing jointly, if both spouses are covered by a workplace retirement plan, the deduction phases out between $129,000 and $149,000. If only one spouse is covered by a workplace retirement plan, the deduction phases out is between $242,000 and $252,000.
Roth IRA
Your ability to contribute directly to a Roth IRA depends on your income.
If you file taxes as single or head of household and are under age 50, you can contribute up to $7,500 to a Roth IRA for 2026, as long as you have enough earned income and your modified adjusted gross income, or MAGI, is within the IRS limits. For 2026, single filers and heads of household can make a full Roth IRA contribution if their MAGI is less than $153,000. The contribution is reduced if MAGI is between $153,000 and $168,000, and no direct Roth IRA contribution is allowed once MAGI reaches $168,000 or more.
If you are married filing jointly and under age 50, each spouse can contribute up to $7,500 per year, if the couple has enough earned income and their MAGI is within the IRS limits. For 2026, married couples filing jointly can make a full Roth IRA contribution if their MAGI is less than $242,000. The contribution is reduced if MAGI is between $242,000 and $252,000, and no direct Roth IRA contribution is allowed once MAGI reaches $252,000 or more.
Roth IRA contributions are not tax deductible. However, qualified withdrawals may be tax-free.
2) What is earned income?
For IRA contribution purposes, earned income generally includes wages, salaries, tips, commissions, bonuses, and net self-employment income. It generally does not include investment income, pension or annuity income, deferred compensation, Social Security benefits, or unemployment compensation.
Your IRA contribution for the year generally cannot be more than your taxable compensation for that year. For married couples filing jointly, one spouse’s taxable compensation may be used to support IRA contributions for both spouses, as long as the couple has enough earned income to cover the total amount contributed.
3) Can I contribute more to these accounts as I get older? (catch-up)
Traditional IRA
Yes. For 2026, you can contribute an extra $1,100 to an IRA if you are age 50 or older. This means your total IRA contribution limit is $8,600 for 2026. Whether a traditional IRA contribution is tax deductible will depend on your income, filing status, and whether you or your spouse are covered by an employer-sponsored retirement plan.
Roth IRA
Yes. For 2026, you can contribute an extra $1,100 to an IRA if you are age 50 or older and otherwise eligible to contribute. This means your total IRA contribution limit is $8,600 for 2026. Roth IRA contributions are not tax deductible, and direct Roth IRA eligibility depends on your MAGI.
The age 50 and older catch-up contribution applies to your combined traditional and Roth IRA contributions. It is not a separate catch-up limit for each account type.
4) Can I contribute to IRA accounts after I retire?
Traditional IRA
Yes, you can make a contribution to a traditional IRA in any year you have earned income from employment, even if it is part-time work or some amount earned through freelance or contracting work for which you receive a 1099 tax form for your earnings. However, your contribution cannot be higher than the amount of money you earned that year.
Roth IRA
Yes, you can make a contribution to a Roth IRA in any year you have earned income from employment that falls within the overall maximum income limits for contributions. Your contribution cannot be higher than the amount of money you earned that year.
5) What can I do if I am above the income limits for contributing to a Roth IRA?
Traditional IRA
You can contribute to a traditional IRA no matter how much you earn, as long as you have enough earned income, but you may not be able to deduct those contributions from your taxes.
Roth IRA
There are four potential ways to take advantage of a Roth IRA if you make more than the income limits for contributions.
- Convert a traditional IRA to a Roth IRA. You can convert amounts you have already saved in a traditional IRA into a Roth IRA. A Roth conversion generally requires you to pay income taxes on the taxable amount converted from the traditional IRA into the Roth IRA. You may convert the entire traditional IRA balance at once or make multiple conversions over time.
- Leverage your employer retirement plan. Your workplace 401(k) or 403(b) retirement plan may allow you to make designated Roth contributions. Ask your employer or plan administrator if this is an option. Roth contribution income limits do not apply to workplace retirement plan Roth contributions, but elective deferrals within your retirement plan are still subject to annual contribution limits.
- Consider a backdoor Roth IRA strategy. A backdoor Roth IRA strategy may allow some high-income taxpayers to fund a Roth IRA indirectly. This generally involves making a nondeductible contribution to a traditional IRA and then converting those dollars to a Roth IRA. Because the original contribution is nondeductible, the conversion may be partially or fully tax-free. However, the IRS pro-rata rule can cause part of the conversion to be taxable if you have other pre-tax traditional IRA, SEP IRA, or SIMPLE IRA assets. This process is generally reported on IRS Form 8606.
- Consider a mega backdoor Roth strategy if your employer plan allows it. Some individuals may be able to save more through a mega backdoor Roth strategy, which involves making after-tax contributions to an employer retirement plan and then converting those dollars to a Roth account, if the plan allows after-tax contributions and in-plan Roth conversions or Roth IRA rollovers.
Watch: Mega Backdoor Roth Explained (2026): How it Works, Limits, and Tax Strategy
6) How do I withdraw money from my IRA accounts?
Traditional IRA
In general, you can make penalty-free withdrawals from a traditional IRA once you reach age 59½. These withdrawals are generally taxed as ordinary income. You may be able to make withdrawals before age 59½ without the 10% early withdrawal penalty under certain IRS exceptions, although income taxes may still apply.
Traditional IRA owners generally must begin taking required minimum distributions, or RMDs, at age 73 or 75 depending on the year you were born. RMDs are calculated using IRS life expectancy tables and the account balance from the prior year-end.
Roth IRA
Roth IRA contributions (excluding earnings) can generally be withdrawn at any time tax- and penalty-free because they were made with after-tax dollars.
Different rules apply to Roth IRA earnings. Earnings are generally tax- and penalty-free only if the distribution is qualified. A qualified Roth IRA distribution usually requires that the Roth IRA has satisfied the five-year rule and that the distribution is made after age 59½, due to disability, after death, or for a qualified first-time home purchase up to the lifetime limit.
The original owner of a Roth IRA is not required to take RMDs during their lifetime, which can make Roth IRAs useful for retirement income flexibility and tax-efficient estate planning for your heirs.
7) How do I leave these accounts to my heirs?
Traditional IRA
You can name beneficiaries for your traditional IRA. Your heirs will generally have to take required distributions from the inherited account and pay income taxes on taxable distributions.
Under current inherited IRA rules, many non-spouse beneficiaries must withdraw the full inherited IRA balance by the end of the 10th year after the original owner’s death. Different rules may apply for certain beneficiaries.
Roth IRA
In general, heirs can withdraw inherited Roth IRA assets income-tax-free if the Roth IRA’s five-year rule has been satisfied. Withdrawals of Roth IRA contributions from an inherited Roth IRA are tax-free, and most withdrawals of earnings are also tax-free once the five-year rule has been met.
Most non-spouse beneficiaries must withdraw the full inherited Roth IRA balance by the end of the 10th year after the original owner’s death. However, certain eligible designated beneficiaries may have different distribution options.
Read: Inherited Parent’s IRA: How Does It Work?
Final Thoughts
The details involved in maintaining and managing traditional and Roth IRAs can be complex and depend on a person’s specific facts and circumstances. Contribution limits, deduction rules, Roth IRA income limits, conversion tax treatment, withdrawal rules, and inherited IRA rules may vary based on income, filing status, workplace retirement plan coverage, age, beneficiary status, and other factors.
Whether you are the original owner or a beneficiary, it is important to consult your financial advisor and tax professional before making a contribution, conversion, withdrawal, or beneficiary planning decision related to an IRA.
Disclaimer:
The individual views and opinions expressed herein are solely those of the author/speaker and may not necessarily reflect the views and opinions of Blue Chip Partners, LLC. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for individualized financial, tax, legal or accounting advice. The information contained herein does not constitute individualized tax advice, and should not be used by any person to avoid tax penalties that may be imposed under the Internal Revenue Code. Any prospective investor should consult an independent tax advisor about their individual situation and needs. Tax laws can change and it is important to stay informed about potential legislative developments that may impact your tax situation. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that any statements, opinions, or forecasts provided herein will prove to be correct. Past performance does not guarantee future results.
