What if I Earn Too Much for a Roth IRA?
If your income exceeds the Roth IRA limits, you have a few options to consider:
- Focus on Traditional IRA: If you're not covered by a workplace retirement plan, you can still deduct Traditional IRA contributions at any income level.
- Max out workplace plans: Consider contributing as much as you can to reach your workplace plan’s annual limit and capture all employer matches to maximize your retirement savings.
- Backdoor Roth IRA: This is when you make a nondeductible Traditional IRA contribution, then convert it to a Roth IRA. This strategy has tax implications, so consult a tax professional before executing it.
Why Even Small Increases Matter
Even an extra $50 or $100 a month might seem small, but over time it can make a meaningful difference. If your income goes up, you could consider increasing your monthly IRA contribution to make the most of your retirement savings. The earlier you start contributing more, the more you benefit from compound interest.
It’s tempting to think, "I’ll catch up later”, but even small increases today can have a bigger impact than larger contributions down the road, because your money has more time to grow.
Should I Increase My IRA Contributions for 2026?
The decision isn't just about hitting the maximum, it's about your personal financial situation. Here are key questions to ask yourself:
1. Can You Comfortably Afford an Increase?
If boosting your contributions would strain your budget, start small. Every extra dollar counts, but only if you can stick with it.
2. Are You Behind on Your Retirement Savings?
If you're behind on your retirement goals, increasing contributions now can help you catch up. If you're already on track, even small increases can give your future a boost without major budget changes.
3. Will You Benefit from Tax Advantages?
Traditional IRA: Contributions may be tax-deductible, reducing your taxable income. You pay taxes when you withdraw in retirement. This works best if you expect to be in a lower tax bracket later.
Roth IRA: Contributions are made with after-tax dollars (no deduction now), but qualified withdrawals in retirement can be tax-free, including all growth. This works best if you expect higher taxes later or want tax-free income in retirement.
4. Do You Have High-Interest Debt or Need an Emergency Fund?
There are situations where it makes sense to hold off on increasing contributions:
Remember, you can adjust your contributions anytime, up to the annual limit. Even small increases can make a difference over time, so it’s better to contribute something than nothing at all.
How to Take Action
If you've decided to increase your IRA contributions for 2026, here's a simple plan:
Step 1: Check your current contribution rate
Look at how much you're currently putting in each month.
Step 2: Decide on an increase
Even a small bump in contributions can potentially make a difference in the long run.
Step 3: Update your contributions
Adjust your IRA contributions with your financial institution or set up automatic contributions (if you can) to save consistently.
Step 4: Track your progress
Check your contributions periodically and make adjustments to stay aligned with your retirement goals
Review Your Retirement Strategy for 2026
With the 2026 IRA contribution limits out, now is the right time to review your retirement strategy. Before making changes:
- Consider your overall financial picture (debt, emergency fund, upcoming expenses)
- Make sure you're choosing the right type of IRA (Traditional or Roth) for your tax situation
- Pick a contribution increase that feels comfortable and sustainable
Every extra dollar you contribute now is a step closer to the retirement you're working toward, and if you have old 401(k)s or IRAs, PensionBee helps make it simple to roll over your old 401(k)s and IRAs into a single account, with a 1% match available on every rollover and contribution (terms and conditions apply). With expert management and diversified portfolios with ETFs like SPY and MDY from State Street Investment Management, one of the world’s largest asset managers.
Frequently Asked Questions (FAQs)
1. What is the IRA contribution limit for 2026?
The 2026 IRA contribution limit is $7,500 for individuals under age 50 (up from $7,000 in 2025). If you're 50 or older, you can contribute an additional $1,100 catch-up contribution (up from $1,000 in 2025), for a total of $8,600 (up from $8,000 in 2025). These limits apply to both Traditional and Roth IRAs combined.
2. What is the catch-up contribution limit for people age 50 and over in 2026?
The catch-up contribution for people age 50 and older is $1,100 in 2026 (up from $1,000 in 2025). This brings your total allowable IRA contribution to $8,600 ($7,500 base + $1,100 catch-up).
3. What are the Roth IRA income phase-out ranges for 2026?
For Single filers and Head of Household:
- Full contribution: MAGI under $153,000
- Partial contribution: MAGI between $153,000 and $168,000
- No contribution allowed: MAGI of $168,000 or more
For Married Filing Jointly:
- Full contribution: MAGI under $242,000
- Partial contribution: MAGI between $242,000 and $252,000
- No contribution allowed: MAGI of $252,000 or more
For Married Filing Separately:
- Partial contribution: MAGI between $0 and $10,000
- No contribution allowed: MAGI of $10,000 or more
4. Am I eligible to contribute to a Roth IRA based on my income?
Your eligibility depends on your Modified Adjusted Gross Income (MAGI) and filing status. If your MAGI falls below the phase-out range for your filing status (see above), you can make a full contribution. If you're in the phase-out range, you can make a reduced contribution. Above the phase-out range, you cannot contribute directly to a Roth IRA (but may consider a backdoor Roth strategy).
5. What are the Traditional IRA deduction phase-out limits if I'm covered by a workplace retirement plan for 2026?
If you're covered by a workplace retirement plan (401(k), 403(b), etc.), your ability to deduct Traditional IRA contributions depends on your income:
For Single filers and Head of Household:
- Full deduction: MAGI under $81,000
- Partial deduction: MAGI between $81,000 and $91,000
- No deduction: MAGI of $91,000 or more
For Married Filing Jointly (you're covered):
- Full deduction: MAGI under $129,000
- Partial deduction: MAGI between $129,000 and $149,000
- No deduction: MAGI of $149,000 or more
For Married Filing Jointly (your spouse is covered, you're not):
- Full deduction: MAGI under $242,000
- Partial deduction: MAGI between $242,000 and $252,000
- No deduction: MAGI of $252,000 or more
If you're not covered by a workplace plan, you can deduct Traditional IRA contributions regardless of income.
6. Should I contribute to a Roth IRA or a Traditional IRA?
Consider a Roth IRA if:
- You expect to be in a higher tax bracket in retirement
- You want tax-free withdrawals in retirement
- You want flexibility (no Required Minimum Distributions)
- You're younger with decades until retirement
Consider a Traditional IRA if:
- You want to reduce your taxable income now
- You expect to be in a lower tax bracket in retirement
- You need the immediate tax deduction
- You're not covered by a workplace plan (deduction available at any income)
Many people split contributions between both types to diversify their tax strategy.
7. Can I contribute to both a Traditional and Roth IRA in 2026?
Yes, you can contribute to both a Traditional IRA and a Roth IRA in the same year. However, the combined total cannot exceed the annual contribution limit.
8. What is a backdoor Roth IRA and should I consider it?
A backdoor Roth IRA is a strategy for high earners who exceed Roth IRA income limits. Here's how it works:
- Make a nondeductible contribution to a Traditional IRA (no income limits)
- Immediately convert that Traditional IRA to a Roth IRA
- Pay taxes on any earnings during the conversion
Consider it if:
- Your income exceeds Roth IRA limits
- You don't have significant pre-tax IRA balances (to avoid pro-rata tax complications)
- You want Roth IRA benefits despite high income
Important: Backdoor Roth conversions have tax implications, especially if you have existing Traditional IRA balances. Consult a tax professional before executing this strategy.
9. What is my MAGI (Modified Adjusted Gross Income)?
Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (AGI) from your tax return with certain deductions added back.
10. When is the deadline to make 2026 IRA contributions?
You have until April 15, 2027 to make IRA contributions that count toward the 2026 tax year. This gives you over 15 months to contribute (from January 1, 2026 through April 15, 2027).
11. What is the pro-rata rule for backdoor Roth conversions?
The pro-rata rule applies when you convert a Traditional IRA to a Roth IRA and you have both pre-tax and after-tax money in Traditional IRAs.
The rule: You can't just convert the after-tax portion. The IRS requires you to convert a proportional mix of pre-tax and after-tax dollars across ALL your Traditional, SEP, and SIMPLE IRAs.
12. What are the Required Minimum Distribution (RMD) rules for Traditional vs. Roth IRAs?
Traditional IRA:
- You must start taking Required Minimum Distribution (RMD)s at age 73 (or age 75 if you turn 73 after December 31, 2032)
- RMDs are calculated based on your account balance and life expectancy
- RMDs are taxed as ordinary income
- Failure to take RMDs results in a 25% penalty on the amount not withdrawn
Roth IRA:
- No RMDs during your lifetime (as of the SECURE 2.0 Act)
- Money can grow tax-free indefinitely
- Beneficiaries may have RMD requirements after you pass away
- Qualified withdrawals are 100% tax-free
This is a major advantage of Roth IRAs for estate planning and long-term wealth building.
