Roth IRA
6 questions
- Finance
How do I invest for retirement in my 20s?
In your 20s, your most valuable asset is time — a dollar invested at 22 is worth roughly four times more at retirement than a dollar invested at 42. The playbook is straightforward: capture your 401k employer match, open a Roth IRA, buy low-cost index funds, and invest consistently.
- Finance
How do I open a Roth IRA?
Opening a Roth IRA takes about 15 minutes online — choose a brokerage (Fidelity, Vanguard, or Schwab are the top picks), complete the application, fund the account, and buy index funds. The main requirement is having earned income and falling below the Roth IRA income limits.
- Finance
What are the IRA contribution limits?
In 2026, you can contribute up to $7,500 per year to an IRA if you're under 50, or $8,600 if you're 50 or older. This limit is shared across all your IRAs — you cannot contribute $7,500 to a Roth and another $7,500 to a traditional IRA in the same year.
- Finance
What is a backdoor Roth IRA and how does it work?
A backdoor Roth IRA is a two-step strategy for high earners who exceed Roth IRA income limits: contribute to a traditional IRA with after-tax money, then convert it to a Roth IRA. The pro-rata rule creates a tax complication if you have other traditional IRA balances.
- Finance
What is a Roth IRA vs a traditional IRA?
A Roth IRA uses after-tax dollars and grows tax-free — you pay no tax on withdrawals in retirement. A traditional IRA gives you a tax deduction now and you pay taxes on withdrawal. Choose Roth if you expect to be in a higher tax bracket in retirement; choose traditional if you want the deduction today.
- Finance
When can I withdraw from my IRA without penalty?
You can withdraw from any IRA without the 10% early withdrawal penalty at age 59½. For a Roth IRA, earnings also need to have been in the account for at least 5 years (the '5-year rule') to be tax-free. Roth IRA contributions — but not earnings — can be withdrawn at any age with no tax or penalty.