In US retirement planning, the IRA (Individual Retirement Account) is the other main pillar alongside the 401(k). It's a retirement account you open yourself, not through an employer — and the eternal question is "Roth or Traditional?" It comes down to saving on taxes now or withdrawing tax-free later. Every figure below comes from the IRS's confirmed 2026 amounts.
One thing few people know first. If only one spouse is covered by a workplace retirement plan, the uncovered spouse gets a much higher income range. Per the IRS release it runs $242,000 to $252,000 — separate from the $129,000 to $149,000 band that applies when the contributor is covered. Not knowing this is why plenty of couples assume "we earn too much" and never look again.
What is an IRA?
An IRA is a retirement account you open yourself at a bank or brokerage, choosing your own investments. Use it when you have no employer 401(k), or after maxing one out. The two main types are Traditional and Roth.
2026 limits — the IRS figures
| Item | 2026 | 2025 |
|---|---|---|
| Base contribution | $7,500 | $7,000 |
| Catch-up, age 50+ | +$1,100 (total $8,600) | +$1,000 |
| Applies to | Traditional + Roth combined | Same |
Note — this limit is combined across Traditional and Roth. Split between them if you like, but the total can't exceed $7,500 ($8,600 at 50+). It's separate from the 401(k) limit, so you can add an IRA even after maxing a 401(k).
⚠️ Over-contributing is not a one-time penalty. The IRS states that excess contributions are "taxed at 6% per year" — and it repeats every year the excess stays in the account. If you spot the mistake, remove it rather than leave it.
On age limits: the 70½ contribution bar was removed for 2020 and later. The IRS page separates "2020 and later" from "2019 and earlier." With earned income, age no longer stops you.
Traditional vs Roth: the core comparison
| Item | Traditional IRA | Roth IRA |
|---|---|---|
| Going in | Deductible (conditional) | After-tax (no deduction) |
| While growing | Tax-deferred | Tax-deferred |
| Coming out | Fully taxed | Principal + gains tax-free |
| RMDs | From age 73 | None (no lifetime RMDs) |
| Principal withdrawal | Tax/penalty before 59½ | Contributions withdrawable anytime, tax-free |
Roth's big wins are tax-free retirement income and no RMDs — grow it large, withdraw tax-free, and it's advantageous to leave to heirs.
Roth IRA income limits (2026)
High income restricts direct Roth contributions. The 2026 MAGI ranges from IRS release IR-2025-111:
| Filing status | 2026 phase-out range | 2025 |
|---|---|---|
| Single / head of household | $153,000 – $168,000 | $150,000–$165,000 |
| Married filing jointly | $242,000 – $252,000 | $236,000–$246,000 |
| Married filing separately | $0 – $10,000 | Same (not indexed) |
⚠️ Married filing separately runs $0 to $10,000. That is effectively a closed door — and the Traditional deduction band is identical. The IRS notes this range is not subject to a cost-of-living adjustment, so it never rises. If you are weighing separate filing, put this in the calculation.
Traditional IRA deduction ranges (2026)
With a Traditional IRA, contributing and deducting are separate questions. You can contribute at any income, but being covered by a workplace plan limits the deduction.
| Situation | 2026 phase-out range | 2025 |
|---|---|---|
| Single, covered by a workplace plan | $81,000 – $91,000 | $79,000–$89,000 |
| Married filing jointly, contributor covered | $129,000 – $149,000 | $126,000–$146,000 |
| Contributor not covered, spouse covered | $242,000 – $252,000 | $236,000–$246,000 |
| Married filing separately, covered | $0 – $10,000 | Same (not indexed) |
The third row is the one to notice. If you are self-employed with no workplace plan and only your spouse is covered, the deduction survives all the way to $242,000 of joint income — over $110,000 more headroom than when the contributor is covered.
If income shuts you out of a direct Roth contribution, the Backdoor Roth route is to contribute to a Traditional IRA and convert. The basis is that IRS Publication 590-A states conversions have no income limits. Contribution limits and conversion limits are separate axes.
The Saver's Credit — check it if income is modest
Simply contributing to a retirement account can earn an extra credit. The 2026 income ceilings:
| Filing status | 2026 ceiling | 2025 |
|---|---|---|
| Married filing jointly | $80,500 | $79,000 |
| Head of household | $60,375 | $59,250 |
| Single / married filing separately | $40,250 | $39,500 |
Early-career and part-time earners often qualify. Worth checking while you are already opening the account.
Roth IRA income limits (2026)
High earners are limited from contributing directly to a Roth. Here are the 2026 MAGI ranges.
| Filing status | Full contribution | Partial (phase-out) | Not allowed |
|---|---|---|---|
| Single / HoH | Under $153,000 | $153,000–$168,000 | Over $168,000 |
| Married filing jointly | Under $242,000 | $242,000–$252,000 | Over $252,000 |
If your income is too high, the Backdoor Roth (contribute to Traditional, then convert) is an option — confirm with a tax pro. Traditional IRA deductibility may be limited by your income and whether you have a workplace plan.
Example: a 30-something earning $90,000
Single, $90,000 a year, in your 30s. ① Your income is under the Roth limit ($153,000), so you can use a Roth IRA. ② Being young with income likely to rise, paying tax now (Roth) and withdrawing tax-free later tends to win. ③ First capture your 401(k) match, then fill the Roth IRA to $7,500. ④ Feel the long-term compounding with our compound calculator.
What order to save (the classic sequence)
- ☐ ① 401(k) up to the employer match (free money)
- ☐ ② Fill the IRA (consider Roth first)
- ☐ ③ Finish maxing the 401(k)
- ☐ ④ Beyond that, a taxable brokerage account
- ☐ Always keep an emergency fund (3–6 months) separate
Key point. Roth vs Traditional is really "pay tax now or later." Low rate now (early-career/low-income) → Roth; high rate now → Traditional deduction. Unsure? Splitting between them is fine.
Questions you may have
Q. Can I have both a 401(k) and an IRA?
Yes — separate limits. But Traditional IRA deductibility can be limited if you have a workplace plan, based on income. Roth IRA follows the income limits above.
Q. Can I withdraw Roth principal anytime?
It is widely stated that contributions can be withdrawn tax- and penalty-free at any time. However, this article could not verify the Roth IRA five-year rule and ordering rules against the IRS original — the relevant section of Publication 590-B does not extract from the web page. Confirm with the IRS or a tax professional before withdrawing.
Q. What does an early withdrawal cost?
Generally a 10% additional tax. But a SIMPLE IRA withdrawn within the first two years carries 25%, not 10% — a difference many people miss.
Q. I over-contributed by mistake.
It is taxed at 6% per year, repeating. Not a one-off — fix it promptly.
Q. I'm over 70 — can I still contribute?
Yes. The 70½ limit was removed for 2020 and later. Earned income is all you need.
Q. What's a Backdoor Roth?
A legal way for high earners to reach a Roth: contribute to a Traditional IRA, then convert. Existing Traditional balances complicate the tax (pro-rata rule), so consult a tax pro.
Q. Does this overlap with Korea's pension?
Different systems, no overlap. Use an IRA on the US side; use Korea's national pension on the Korean side. With both work histories, check the US-Korea totalization agreement.
Sources and where to check
- Internal Revenue Service — 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111). Source of the $7,500 limit and $1,100 catch-up, all four Traditional deduction ranges, all three Roth ranges, the Saver's Credit ceilings and the 2025 comparisons.
- Internal Revenue Service — Retirement topics — IRA contribution limits (updated 3 March 2026). Source of the combined Traditional-plus-Roth limit, the "taxed at 6% per year" excess rule and the removal of the 70½ bar for "2020 and later."
- Internal Revenue Service — Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs). Basis for the Backdoor Roth: conversions have no income limits. ⚠️ This publication is for use in preparing 2025 returns, so its dollar figures are 2025 values — the 2026 figures above come from the release.
- Internal Revenue Service — Retirement plans FAQs regarding IRA distributions (updated 23 March 2026). Source of the 10% additional tax before 59½ and the 25% SIMPLE IRA rate in the first two years.
Written as of July 2026. Contribution limits, catch-ups, Traditional deduction ranges, Roth income ranges, the Saver's Credit, the 6% excess tax, the removal of the 70½ bar and early-withdrawal rates all come from the IRS sources above, with update dates noted. By contrast, the Roth IRA five-year rule and ordering rules could not be verified, because the relevant section of Publication 590-B does not extract from the web page — so this article does not state them categorically. The pro-rata rule for a Backdoor Roth and its computation could not be checked against the original either. The IRS's dedicated Roth limit page has no 2026 edition (only 2024 and 2023), so the release was used instead. A Backdoor Roth gets complicated when you hold existing Traditional balances — consult a CPA. This is general information, not tax or investment advice.
