NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance.
We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners.
Roth IRA Basics: What It Is, How It Works
A Roth IRA is an individual retirement account that you contribute to with after-tax dollars. While you don't get a tax break up front, your contributions and investment earnings grow tax-free.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Updated · 2 min read
How is this page expert verified?
NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
June Sham Lead Writer | Personal finance, retirement
June Sham is a lead writer on NerdWallet’s investing and taxes team covering retirement and personal finance. She is a licensed insurance producer, and previously was an insurance writer for Bankrate specializing in home, auto and life insurance. She earned her Bachelor of Arts in creative writing at the University of California, Riverside.
Michael Randall, CFP®, EA is a senior wealth advisor at Myers Financial Group, a fee-only fiduciary wealth management firm based in San Diego, California. Michael is passionate about investment advice, wealth management, and tax planning. Prior to his time at Myers Financial Group, Michael worked as a financial advisor at a $4B wealth management firm with offices along the West Coast. Michael earned an undergraduate degree in economics at the University of California, Berkeley. He volunteers as a University of California, Berkeley alumni ambassador. Michael is a certified financial planner and an IRS enrolled agent.
At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work.
Pamela de la Fuente Assigning Editor | Consumer Credit, Debt, Taxes, Retirement, Underrepresented communities
Pamela de la Fuente leads NerdWallet's consumer credit and debt team. Her team covers credit scores, credit reports, identity protection and ways to avoid, manage and eliminate debt. Previously, she led taxes and retirement coverage at NerdWallet. She has been a writer and editor for more than 20 years.
Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star.
She is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all.
She is a graduate of the Maynard Institute's Maynard 200 program, and was a presenter at the National Association of Black Journalists convention in 2023. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She is also a founding co-chair of NerdWallet's Nerds of Color employee resource group.
Pamela is a firm believer in financial education and closing the generational wealth gap. She got into journalism to tell the kind of stories that change the world, in big and small ways. In her work at NerdWallet, she aims to do just that.
Elizabeth Ayoola Writer | Retirement, credit, wellness
Elizabeth Ayoola is a NerdWallet personal finance writer and small business owner. She graduated from King's College London with a master's in environment, politics and globalization, and she has over 10 years of writing experience. Her journey to finance writing started with a goal to learn as much as she could about how to attain financial freedom and share information with others about how to do it, too. This led her to Debt.com, where she covered topics relating to mortgages, debt and credit. Her articles have appeared on platforms like The Associated Press, The Washington Post, Essence, The Knot, MSN, Parents.com, Yahoo and PopSugar.
A Roth IRA is a type of individual retirement account that lets you contribute after-tax money to save for retirement. The main draw of a Roth IRA is that the money grows tax-free and can be withdrawn tax-free after age 59 ½ as long as the account has been open for at least five years.
The main difference between a Roth IRA and a traditional IRA is how it's taxed. In a traditional IRA, contributions are tax-deductible in the year they're made, but withdrawals in retirement are taxed.
You contribute to a Roth IRA using money that has already been taxed. Those contributions can then be invested in stocks, ETFs, bonds, or more. Over time, the investments in your Roth IRA could earn a return, growing tax-free. In retirement, you'll also get to withdraw those earnings tax-free as long as Roth IRA withdrawal rules are followed.
You can contribute to a Roth IRA using money earned from a job, but contributions could also come from a Roth 401(k) plan rollover, a conversion from an existing traditional IRA or 401(k) plan, a spousal contribution, or other transfer.
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
NerdWallet's ratings are determined by our editorial team. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.
When it comes to Roth IRAs, whether you can contribute directly — and how much you can contribute — depends on your tax filing status and annual income.
For 2024, if your modified adjusted gross income (MAGI) is below $146,000 (single filers) or below $230,000 (married filing jointly), you can contribute the full amount the IRS allows to a Roth IRA — $7,000 for those under 50 and $8,000 for those 50 and older. At incomes above the limits, the amount you can contribute becomes smaller until you are no longer eligible.
Roth IRA limits for 2024
Filing status
Roth IRA income limits 2024
Roth IRA contribution limits 2024
Single, head of household, or married filing separately (if you didn't live with spouse during year)
Less than $146,000.
$7,000 ($8,000 if 50 or older).
$146,000 or more, but less than $161,000.
Contribution is reduced.
$161,000 or more.
No contribution allowed.
Married filing jointly or surviving spouse
Less than $230,000.
$7,000 ($8,000 if 50 or older).
$230,000 or more, but less than $240,000.
Contribution is reduced.
$240,000 or more.
No contribution allowed.
Married filing separately (if you lived with spouse at any time during year)
Less than $10,000.
Contribution is reduced.
$10,000 or more.
No contribution allowed.
For 2025, your MAGI must be below $150,000 as a single filer or below $236,000 as a joint filer to contribute the full amount to a Roth IRA. In 2025, the Roth IRA limit remains the same at $7,000 ($8,000 for those 50 or older).
Roth IRA limits for 2025
Filing status
Roth IRA income limits 2025
Roth IRA contribution limits 2025
Single, head of household, or married filing separately (if you didn't live with spouse during year)
Less than $150,000.
$7,000 ($8,000 if 50 or older).
$150,000 or more, but less than $165,000.
Contribution is reduced.
$165,000 or more.
No contribution allowed.
Married filing jointly or surviving spouse
Less than $236,000.
$7,000 ($8,000 if 50 or older).
$236,000 or more, but less than $246,000.
Contribution is reduced.
$246,000 or more.
No contribution allowed.
Married filing separately (if you lived with spouse at any time during year)
High-earners could explore doing a backdoor Roth IRA to convert funds from a traditional IRA into a Roth, or a mega backdoor Roth to convert from a 401(k) plan to a Roth IRA (if your plan allows).
Roth IRA rules
Setting aside money in a retirement account — and not being able to access it for years — can feel intimidating. With a Roth IRA, it's a little different. Here's a quick explainer on the rules of withdrawing from your Roth IRA.
You can withdraw your original contributions whenever you want without owing any penalties or taxes, no matter how long your account has been open. That's because the money you put in is money you've already paid income tax on.
When you withdraw money from a Roth IRA, the IRS always assumes your original contributions come out first.
People at least 59 ½ years old and who have held their accounts for at least five years can take distributions, including earnings, without paying federal taxes
In contrast to the traditional IRA, Roth IRAs do not have required minimum distributions (RMDs), in which account holders are required to withdraw a certain amount every year in retirement. Instead, with a Roth IRA, the account owners are not required to make withdrawals during their lifetime.
Qualified withdrawals of investment earnings in the account come out tax-free. The key here is "qualified." If you withdraw earnings before 59 ½ or otherwise don’t meet the rules for a qualified withdrawal, the IRS may want a piece of those returns in the form of taxes and a possible penalty. (Get the full details on Roth IRA withdrawal rules.)
Examples of qualified withdrawals before age 59½ include a first home purchase, qualified education expenses, health insurance premiums while unemployed, disability-related expenses, and having a baby or adopting. Be sure you understand all the rules of these exceptions.
What makes a Roth IRA so attractive to investors is the potential tax savings. If you think you'll be in a higher tax bracket when you retire than you are now, a Roth IRA may be more beneficial than a traditional IRA for long-term financial planning. The reason: You've already paid taxes on your contributions, so your higher tax bracket won't result in a high tax bill when it's time to enjoy your hard-earned money.
Another reason the Roth IRA is attractive is rising inflation. Inflation erodes the value of money over time. Giving your money an opportunity to grow tax-free can be extra lucrative when inflation is high.
Five-year wait to withdraw earnings: Waiting five years from the tax year of your first Roth IRA contribution to withdraw earnings tax-free can be a drawback if you’re close to retiring. Withdrawing contributions before fulfilling the five-year rule could result in paying income taxes and a 10% penalty.
No tax deductions: You also aren’t eligible for any tax deductions during the year you contribute, unlike with a traditional IRA. Tax deductions are helpful as they can reduce your adjusted gross income, and your overall tax bill for the year you contribute. You may qualify to claim the saver’s credit, which is a tax credit you get for making eligible contributions to an IRA. Keep in mind that the credit has income restrictions.
Income limits: Roth IRAs have income limits unlike traditional IRAs. If you make more than the allowed amount, you may not qualify for a Roth IRA.
Should you contribute to a 401(k) or a Roth IRA?
You don't have to choose. As long as you're eligible for a Roth IRA, you can contribute to that alongside an employer-sponsored retirement plan like a 401(k). But that, of course, requires having enough money to contribute to both, which isn't always possible. If you need to choose one place to direct your dollars, read our comparison of 401(k)s vs. IRAs.
Can you lose money in a Roth IRA?
Yes. You can put your Roth IRA money in a variety of investments, and some of those investments may lose value, especially in the short term. It's important to understand your risk tolerance when choosing investments. Learn more about how to invest your IRA.
What are the Roth IRA benefits?
What makes a Roth IRA so attractive to investors is the potential tax savings. If you think you'll be in a higher tax bracket when you retire than you are now, a Roth IRA may be more beneficial than a traditional IRA for long-term
. The reason: You've already paid taxes on your contributions, so your higher tax bracket won't result in a high tax bill when it's time to enjoy your hard-earned money.
Another reason the Roth IRA is attractive is rising inflation. Inflation erodes the value of money over time. Giving your money an opportunity to grow tax-free can be extra lucrative when inflation is high.
: Waiting five years from the tax year of your first Roth IRA contribution to withdraw earnings tax-free can be a drawback if you’re close to retiring. Withdrawing contributions before fulfilling the
could result in paying income taxes and a 10% penalty.
No tax deductions
: You also aren’t eligible for any tax deductions during the year you contribute, unlike with a traditional IRA. Tax deductions are helpful as they can reduce your adjusted gross income, and your overall tax bill for the year you contribute. You may qualify to claim the
, which is a tax credit you get for making eligible contributions to an IRA. Keep in mind that the credit has income restrictions.
Income limits
: Roth IRAs have income limits unlike traditional IRAs. If you make more than the allowed amount, you may not qualify for a Roth IRA.
Should you contribute to a 401(k) or a Roth IRA?
You don't have to choose. As long as you're eligible for a Roth IRA, you can contribute to that alongside an employer-sponsored retirement plan like a 401(k). But that, of course, requires having enough money to contribute to both, which isn't always possible. If you need to choose one place to direct your dollars, read our comparison of
Yes. You can put your Roth IRA money in a variety of investments, and some of those investments may lose value, especially in the short term. It's important to understand your risk tolerance when choosing investments. Learn more about
