For 2026, you can contribute up to 7,500 dollars to a Roth IRA if you are under 50, or 8,600 dollars if you are 50 or older. That number is simple. What trips people up is the income test: the full contribution is only available below a certain income, and above that the limit shrinks until it disappears entirely. Knowing where you fall before you contribute saves you from an excess contribution and the penalty that comes with it.

For single filers and heads of household, the full 7,500 dollar contribution is available when modified adjusted gross income is under 153,000 dollars. The limit then phases out between 153,000 and 168,000 dollars, shrinking proportionally, and above 168,000 dollars no direct Roth contribution is allowed at all. For married couples filing jointly, the full contribution applies under 242,000 dollars, with a phase-out range of 242,000 to 252,000 dollars. Married filing separately faces a near-total block, with the phase-out running from zero to 10,000 dollars.

There is a second limit that catches beginners: your contribution cannot exceed your earned income for the year. If you earned 4,000 dollars from a part-time job, 4,000 dollars is your maximum Roth contribution, even though the headline limit is 7,500. Investment income, rental income and gifts do not count as earned income. This is why teenagers with a first job can open a custodial Roth IRA: any earned income qualifies, and the decades of tax-free growth that follow are the most valuable part.

The most common beginner mistake is treating the account as the investment. Opening a Roth IRA and transferring money in does not invest it: the cash sits uninvested until you choose what to buy. For most beginners, the answer is a broad total-market or S and P 500 index fund, held for decades. Set the contribution to automatic, 625 dollars a month maxes out the 7,500 limit over a year, and choose the investment once rather than re-deciding every month.

If your income is above the limit, the backdoor Roth IRA is the standard workaround: contribute to a traditional IRA, which has no income limit for contributions, then convert it to a Roth. The conversion is allowed, but the pro-rata rule means the tax treatment depends on whether you hold other pre-tax IRA money, so this is a case where a quick check with a tax professional is worth the cost. Do not attempt a backdoor conversion while holding a large traditional IRA balance without understanding the tax bill first.

The deadline is generous: you can contribute for the 2026 tax year until 15 April 2027, so there is no rush to fund the whole amount in January. But the habit matters more than the timing. A 25-year-old who maxes out a Roth IRA every year until 65, at a 7% average annual return, ends up with approximately 1.5 million dollars, completely tax-free. The limit is not the hard part. Starting is.

The five-year rule is the Roth IRA detail most people miss. Each conversion and the account itself must satisfy a five-year clock before earnings can be withdrawn tax-free, even after age 59 and a half, and the clock starts on 1 January of the year you first opened any Roth IRA. Contributions, as opposed to earnings, can be withdrawn at any time without tax or penalty, which is why a Roth IRA doubles as a flexible emergency backstop for some savers, although raiding retirement money for a non-emergency is a habit to avoid. The rule matters most for backdoor conversions: converting in December starts the clock in January of that year, so a conversion made late in the year effectively gets a head start. Keep a note of the year you first opened a Roth IRA, because the five-year clock is the one rule that catches people who have done everything else right.