Self-Directed Roth IRAs

For 2026, the IRS has increased the maximum amount you can contribute to a Roth IRA. These limits apply to your combined total contributions across all IRAs, including Roth and Traditional accounts.

• Under age 50: Up to $7,500
• Age 50 and older: Up to $8,600 (includes a $1,100 catch-up contribution)

You must have earned income, and you cannot contribute more than your taxable compensation for the year. Contributions for the 2026 tax year may be made through the federal tax filing deadline (typically April 15, 2027).

Unlike Traditional IRAs, Roth IRAs are not subject to Required Minimum Distributions during your lifetime. This allows assets to remain invested longer and continue growing tax-free, making Roth IRAs a valuable tool for long-term planning and legacy strategies.

Qualified Distributions

A Roth IRA withdrawal is considered qualified when:

• You are age 59½ or older, and
• Your Roth IRA has been open at least five years

Qualified withdrawals are completely tax-free, including earnings.

Non-Qualified Withdrawals

• Contributions (but not earnings) may be withdrawn at any time without tax or penalty
• Earnings withdrawn before age 59½ may be subject to income tax and a 10% early withdrawal penalty, unless an IRS exception applies

Anyone can set up and contribute to a Roth IRA if they meet the following eligibility requirements.

• The account owner has received a taxable salary or wage over the calendar year.
• The MAGI of the account holder does not exceed the IRS-mandated Roth IRA income limits.

Depending on your MAGI, you may not be eligible to contribute to a Roth.

If your MAGI is below the limits decided by the IRS and you have earned income in the contribution year, you may put money into both a 401(k) and Roth IRA. Your MAGI will determine many different benefits you may receive. Still, for retirement accounts, it determines if you are eligible to contribute to a Roth and if you can deduct your traditional IRA contributions.

To calculate your MAGI, you'll first calculate your adjusted gross income. Then, you'll add any deductions specified by the IRS. MAGI is always the same or greater than your AGI.

The primary difference between these two account types is when taxes are due. Roth IRA contributions and investments are immediately taxable, while traditional IRAs delay taxes until taking distributions.

Roth IRA owners pay taxes upon contributing to the IRA but receive no tax break benefits. However, they benefit from paying zero taxes on their IRA funds when they retire.

Traditional IRAs are almost exactly the inverse. You'll pay no taxes while contributing to the IRA, and contributions can be fully or partially tax-deductible. Taxes for traditional IRAs are then due upon retirement when you withdraw distributions.

Your ability to contribute directly to a Roth IRA depends on your Modified Adjusted Gross Income (MAGI) and tax filing status.

If your income falls within the phase-out range, you may still be eligible for a reduced contribution.