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Should You Max Out Your Roth IRA This Year? How to Decide
By thinking ahead, setting manageable goals and knowing your limits, you can make full use of the unique benefits of a Roth IRA.
Andy Rosen is a former NerdWallet writer who covered taxes, cryptocurrency investing and alternative assets. He has more than 15 years of experience as a reporter and editor covering business, government, law enforcement and the intersection between money and ideas. In these roles, Andy has seen cryptocurrency develop from an experimental dark-web technology into an accepted part of the global financial system. He is based in Boston.
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.
Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia.
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Setting aside money for investment in an IRA is a great way to prepare for retirement, but the IRS sets a maximum contribution limit each year: The maximum you can contribute to a Roth IRA is $7,500 for 2026 ($8,600 if aged 50 and older).
🤓Nerdy Tip
Roth IRA contributions also have income limits that can reduce your total contribution limit, or make you ineligible to contribute at all. Be sure you're aware of them before maxing out — here are all the details on Roth IRA income and contribution limits.
But before you dive into maxing out, there are a few factors to consider. We'll also share a few tips for how to max it out if you decide that's the right choice.
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Most people will want to save for retirement in a variety of accounts, including a 401(k) or other workplace retirement plan if you have one available, and an IRA or Roth IRA. How much you should save in each — and whether you should max out — will vary based on your goals, tax situation and other factors. Here are some pros and cons to maxing out your Roth IRA:
Pros
Unlike with a 401(k) plan, you have until the tax filing deadline, usually in mid-April, to add money to your Roth IRA for the prior tax year. This gives you more time to max out.
Also unlike 401(k) plans and traditional IRAs, you won’t owe taxes on your eligible Roth IRA withdrawals. This can provide a tax savings in retirement.
In most cases, unless you save the equivalent of the tax deduction you realize from using a traditional IRA, you'll end up with more money in retirement from maxing out a Roth IRA, due to that ability to take distributions without taxes.
Cons
Contributing to a Roth IRA is best for money you won’t need until retirement. If you have more pressing financial needs, such as short-term debt, it might be worth getting those liabilities squared away first and reducing or pausing Roth IRA contributions until you've done so.
If you're not contributing enough to get an employer match from your 401(k) — if available — you should maximize that match before contributing to outside accounts like a Roth.
Unlike the traditional IRA, there is no upfront tax break for contributing to a Roth IRA.
How to max out your Roth IRA
1. Open an account
Setting up a Roth IRA takes only minutes. Consider looking for providers with low account minimums; low or no account fees and fund minimums; a large selection of no-transaction-fee mutual funds and commission-free ETFs; and the type of customer service and educational resources you desire. For guidance, check out our picks for the best Roth IRA providers.
To actually open the account, you'll need some personal information handy, including your Social Security number, address and bank or brokerage account information, so you can link a funding source.
2. Calculate (or estimate) how much you’ll need in retirement
Saving up to 15% of your pretax income each year for retirement is one rule of thumb. As mentioned above, that's likely more than you can contribute to a Roth IRA each year, so you may need to save in multiple accounts, including the Roth, your 401(k) plan and even a taxable account. Use a retirement calculator to check how much you need to contribute to your Roth IRA and other retirement accounts to build enough of a retirement nest egg.
3. Set manageable goals for contributions
Retirement planning is a decades-long journey, and shorter-term goals, like setting aside the annual IRA maximum, can be daunting for many people. This is money you should try to leave untouched, and growing, for decades.
Breaking down that goal into more manageable weekly or monthly amounts like those referenced above can help. Opt to contribute on a manageable schedule, such as the same day each month. You can set up automated transfers so the process is hands-off.
4. Invest your Roth IRA
Once you’ve opened an account, you'll need to select investments — the Roth IRA itself is just a vessel for your contributions; it is not an investment. To benefit from both diversification and low costs, consider a portfolio constructed of index funds and exchange-traded funds. (Want more details? See these tips on how to invest your IRA.)
When investing your account, automation is again your friend: Set it up so your contributions are automatically invested, if possible, to benefit from dollar-cost averaging. This is a strategy of spreading out investment purchases over time to ensure you don’t invest all your money when prices are high.
5. Know your limits
Don’t despair if you can’t max out a Roth IRA this year. This goal may take time to achieve. Even a few hundred dollars invested can balloon to several thousand dollars over a decade or two.
When in doubt, be prudent: You don't have to try to max out an IRA if you’re racking up high-interest debt in the meantime, or if you don’t have enough to cover monthly expenses. Contribute whatever you can this year, and if you want to, resolve to increase that amount down the road.
