What is a ROTH IRA, and what are its limitations? A Roth IRA (Individual Retirement Account) is a certain type of retirement plan under US law that is generally not taxed provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. The Roth IRA's principal difference from most other tax-advantaged retirement plans is that, rather than granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement. A Roth IRA can contain investments in securities, usually common stocks and bonds, often through mutual funds (although other investments, including derivatives, notes, certificates of deposit, and real estate, are possible). A Roth IRA can also be an individual retirement annuity, which is an annuity contract or an endowment contract purchased from a life insurance company. As with all IRAs, the Internal Revenue Service mandates specific eligibility and filing status requirements. A Roth IRA's main advantages are its tax structure and the additional flexibility that this tax structure provides. Also, there are fewer restrictions on the investments that can be made in the plan than many other tax- advantaged plans, and this adds somewhat to the popularity, though the investment options available depend on the trustee (or the place where the plan is established). Married couples can contribute a combined maximum of ($15,000) (under age 50) or ($17,200) (age 50 or older) to their IRAs in 2026. Each spouse can contribute up to ($7,500) annually, with an extra ($1,100) catch-up contribution allowed for those aged 50 and older Income Limits: While Traditional IRA contributions have no income limits, the ability to make direct Roth IRA contributions is phased out if your Modified Adjusted Gross Income (MAGI) is too high. For married couples filing jointly, full Roth IRA contributions are allowed if your MAGI is less
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