2026 Roth IRA Contribution Limits

For 2026, you can contribute $7,500 to a Roth IRA if you're under 50, or $8,600 if you're 50 or older (the catch-up rose from $1,000 to $1,100 for 2026, the first catch-up indexing under SECURE 2.0 §108). Your ability to contribute directly phases out if your income exceeds certain thresholds. For single filers, the 2026 phase-out range is $153,000 to $168,000. For married filing jointly, it's $242,000 to $252,000. These figures come from IRS Notice 2025-67. Exceed the upper limit and your direct Roth contribution limit is $0. Fall somewhere in between and you can contribute a reduced amount.

The Basic Contribution Limits

The IRS sets annual contribution limits for Roth IRAs. For 2026, the basic limit is $7,500 per person, per year—up from $7,000 in 2024 and 2025. That's the maximum you can contribute to a Roth IRA if you're eligible.

The limit covers regular personal contributions to your Traditional and Roth IRAs combined, not $7,500 per account. It rises to $8,600 if you reach age 50 by year-end. You also need sufficient eligible compensation, and the Roth income rules still apply.

A SEP-IRA needs one extra distinction. Employer contributions under a SEP plan have their own limit and do not use your regular personal IRA contribution room. That includes a self-employed person's employer SEP contribution. But if your SEP-IRA accepts a regular personal IRA contribution, that deposit does count toward the shared $7,500/$8,600 ceiling. It is the type of contribution, not just the account's name, that matters. See the IRS SEP contribution FAQs.

For example: You're under 50, have enough eligible compensation and qualify for the full direct Roth limit in 2026. An employer SEP contribution does not use any of your $7,500 personal allowance. If you also put $2,000 into the SEP-IRA as a regular personal contribution, you have $5,500 left for regular contributions to your other Traditional or Roth IRAs: $7,500 − $2,000 = $5,500. This assumes no other regular IRA contributions for the year.

The $7,500 is indexed to inflation and adjusts annually in $500 increments. The IRS announced the 2026 figures in Notice 2025-67, published November 2025; 2026 was the first year the IRA base limit increased since 2024.

Catch-Up Contributions: Age 50 and Older

If you're age 50 or older by December 31 of the tax year, you're eligible for a catch-up contribution of an additional $1,100 for 2026. That brings your total contribution limit to $8,600.

This catch-up rule was designed to help older workers make up for lower contributions earlier in life. You only qualify if you reach age 50 by the last day of the tax year. If you turn 50 on January 1, 2027, you don't qualify for the 2026 catch-up — but you do for 2027.

A quiet milestone: 2026 is the first year the IRA catch-up ever increased above the original $1,000 statutory figure. SECURE 2.0 §108 (effective 2024) put the IRA catch-up on a CPI-indexed track with $100 rounding, which is why it rose by $100 rather than the $500 increment used for the base limit.

MAGI Income Phase-Outs: The Real Constraint

Here's where the limits get meaningful. The IRS doesn't let everyone contribute the full $7,500 or $8,600 directly to a Roth IRA. If your income is too high, your allowable direct Roth contribution is reduced. Once your income exceeds the upper limit for your filing status, your direct Roth contribution limit is $0.

The phase-out is based on Modified Adjusted Gross Income (MAGI), not your wage income. For most people, MAGI is the same as AGI, but if you have certain deductions like student loan interest or foreign income, MAGI can be different. Consult a tax professional or IRS Publication 590-A to calculate your MAGI.

Source: IRS Notice 2025-67, "2026 Amounts Relating to Retirement Plans and IRAs." The statutory $0–$10,000 MFS phase-out applies only when the filer lived with a spouse at some point during the year. An MFS filer who lived apart from the spouse for the entire year uses the Single/Head-of-Household range.

How to Calculate a Reduced Contribution

If your MAGI falls somewhere in the phase-out range, you can't contribute the full amount. Here's the formula the IRS uses:

Reduction ratio = (MAGI – Lower limit) ÷ Phase-out range

Then multiply your full contribution limit by (1 – reduction ratio) to get your reduced limit. Round up any amount that results in a contribution of $200 or more; if it's less than $200, you can contribute $200.

Spousal IRA Contributions

If you're married and one spouse has no earned income (or very low earned income), the working spouse can make a contribution on behalf of the non-working spouse through a spousal Roth IRA. The contribution limit for the non-working spouse is the same as usual, but the phase-out is based on the couple's combined MAGI, not the working spouse's income alone.

This is a powerful planning tool for couples with one high earner and one stay-at-home parent or non-working spouse. You can essentially double your annual Roth IRA contributions if structured properly.

When to Contribute: The Annual Deadline

You can generally contribute to a Roth IRA for a tax year through the unextended return due date: April 15 of the following year, or the next business day when applicable. For 2026 contributions, that is generally April 15, 2027. A routine Form 4868 extension does not extend this contribution deadline; an IRS disaster postponement or combat-zone relief can provide additional time when its terms apply.

You don't have to wait until April to contribute — most people contribute throughout the year. But you have until the deadline to make contributions that count for that tax year. For example, you can contribute on April 14, 2027, and it will count as a 2026 contribution.

If you miss the deadline, you can't go back and make the contribution for that prior year. However, if you've already overcontributed, you can request a return of excess contribution by the deadline to avoid the penalty.

Excess Contributions: Penalties and How to Fix Them

If you contribute more than you're eligible to contribute in a given year, the excess is subject to a 6% penalty tax per year that the excess sits in the account. This penalty applies to each excess dollar, every year, until it's removed.

For example, if you contributed $1,000 too much and leave it in the account for three years, you owe 6% + 6% + 6% = 18% total as a penalty (ignoring earnings on the excess, which complicates things further).

How to Fix an Excess Contribution

If you realize you overcontributed, you have options:

Request a return of excess: Contact your Roth IRA custodian and request that the excess contribution and all net income attributable to the excess be returned by the tax-return due date, including extensions. The excess itself is not included in income; positive attributable earnings are taxable. SECURE 2.0 §333 removed the 10% additional tax from those earnings for a timely corrective distribution.

Apply the excess to the next year: Some custodians allow you to apply an excess contribution to the following tax year, if you're eligible to contribute in that year. This doesn't eliminate the penalty for the year of overcontribution but does provide a path forward.

Report on Form 5329: If you don't correct the excess by the deadline, file Form 5329 with your tax return to report the 6% penalty. The penalty is unavoidable but at least you'll be in compliance with the IRS.

Other Contribution Rules and Special Situations

Non-Working Spouses

If you don't have taxable compensation in a given year, you can't make a regular IRA contribution unless the joint-return spousal IRA rules apply and the spouses have sufficient combined compensation. Passive income, investment returns, and retirement plan distributions don't count as compensation for regular IRA contribution purposes. This compensation rule does not itself bar converting eligible retirement-account money already held.

Rollovers and Conversions

A Roth conversion (moving eligible retirement-account money to a Roth) is not a regular IRA contribution and doesn't use the $7,500 or $8,600 annual IRA contribution limit. Federal law does not impose a separate annual conversion-dollar cap or a conversion MAGI gate, but you can convert only money actually available in an eligible account, and the taxable amount, pro-rata rule and reporting requirements still apply. Rollovers from employer plans likewise do not use the regular IRA contribution limit.

Married Filing Separately

If you are married filing separately and lived with your spouse at any time during the year, your direct-Roth phase-out range is $0 to $10,000. If your MAGI is above $0, your direct Roth contribution may be reduced; at $10,000 or more, the direct Roth contribution limit is $0. An MFS filer who lived apart from the spouse for the entire year uses the Single/Head-of-Household range instead.

Prior-Year Contribution Strategy

Many people don't realize you can contribute to a Roth IRA for the previous tax year through the unextended return due date—generally April 15, or the next business day. A routine Form 4868 filing extension does not extend the IRA contribution window. Separate IRS disaster postponements or combat-zone relief can provide more time when their terms apply.

Here's how it works: During the early months of 2027, you can make contributions designated for 2026 if you had earned income in 2026. You simply tell your IRA custodian which tax year the contribution is for when you make it. Many people use this window to catch up if they weren't sure about their final income during the year, received a bonus or windfall in early January, or simply forgot to contribute during the prior year.

This strategy is particularly valuable in the first few months of a new year. In February 2027, you could contribute $7,500 designated for 2026 and separately contribute up to the then-announced 2027 limit, if eligible for each year. Tell the custodian which tax year each contribution is for.

Excess Contributions: The 6% Penalty and How to Fix It

If you contribute more than you're eligible to contribute in a given year, the excess is subject to a 6% excise tax per year that the excess sits in the account. This penalty applies to each excess dollar, every year, until it's removed or corrected. The compounding effect of this penalty can be significant if left uncorrected.

Why the 6% Penalty Stings

The 6% penalty is assessed annually on the amount of the excess contribution, regardless of whether the account gained or lost value. For example, if you overcontributed $1,000 and leave it in the account for three years, you owe 6% + 6% + 6% = 18% in penalties alone (before accounting for earnings on the excess, which complicates things further). A $1,000 excess that sits for 3 years costs you $180 just in penalties.

Three Ways to Fix an Excess Contribution

1. Withdraw the excess (plus attributable earnings) before the deadline: Ask the custodian for a return of the excess and its net income attributable by the tax-return due date, including extensions. The excess itself is not included in income; positive attributable earnings are taxable. SECURE 2.0 §333 removed the 10% additional tax from those earnings for a timely corrective distribution. Compare this route with recharacterization or next-year absorption using the actual deadline and account records.

2. Recharacterize the excess as a Traditional IRA contribution: If you have an excess contribution in a Roth IRA, you can recharacterize (convert the contribution type) to a Traditional IRA before your tax filing deadline. This treats the contribution as if it were made to a Traditional IRA from the start. You'll still face tax consequences if you take a distribution, but you avoid the 6% penalty on that specific year. Note: This strategy is more complex if you have multiple IRAs, so consult a tax professional.

3. Apply the excess to the following year's limit: Some custodians allow you to apply an excess contribution to the following tax year, if you're eligible to contribute in that year. This doesn't eliminate the 6% penalty for the year of overcontribution, but the penalty only applies for one year, and the excess becomes a legitimate contribution for the next year. You'll pay 6% penalty for one year but it stops there.

Reporting the Penalty: Form 5329

If you don't correct the excess by your filing deadline, you must file Form 5329 with your tax return. This form reports the 6% excise tax. The penalty is unavoidable at this point, but reporting it ensures you're in compliance with the IRS.

Self-Employment Income and Roth IRA Contributions

If you're self-employed, your eligibility to contribute to a Roth IRA depends on having earned income. The good news: net self-employment income counts as earned income for Roth IRA purposes.

What Qualifies as Self-Employment Income

The following types of self-employment income count toward your earned income requirement:

• Freelance income from contracts, consulting, or project work
• 1099 contractor income from service providers or independent work
• Sole proprietorship net income from a Schedule C business
• Gig economy income from platforms like Uber, DoorDash, or similar services (reported on Schedule C or 1099)
• S-Corp or partnership compensation in the form of W-2 wages or guaranteed payments

Income That Does NOT Qualify

Important caveat: Passive income does not qualify as earned income for Roth IRA contribution purposes. This includes:

• Rental income from real estate
• Dividend income from investments
• Capital gains from stock or property sales
• Interest income from savings or bonds

MAGI Calculation for Self-Employed Individuals

For contribution phase-out purposes, your MAGI includes your self-employment income minus the deductible half of self-employment tax. The self-employment tax deduction (which reduces your AGI) is already reflected in the MAGI calculation, so you don't double-count it. If you're uncertain about your exact MAGI, consult a tax professional or refer to IRS Publication 590-A.

The Backdoor Roth: When You Earn Too Much to Contribute Directly

If your Modified Adjusted Gross Income (MAGI) exceeds the upper phase-out limit for your filing status, you're ineligible to make direct Roth IRA contributions. Income alone does not bar an otherwise eligible Traditional IRA contribution or a later Roth conversion. Those two separate transactions are commonly called a backdoor Roth.

How It Works

First, make an eligible Traditional IRA contribution—generally nondeductible in this high-income example—within the shared annual IRA limit and compensation limit. A later Roth conversion has no MAGI gate and does not use that annual contribution limit. Federal law sets no minimum waiting period between the transactions, but the amount converted cannot exceed available retirement-account assets. Investment gains and the owner’s pre-tax Traditional, SEP and SIMPLE IRA balances can make part of the conversion taxable under the pro-rata rule, and Form 8606 records matter.

Caution: The Pro-Rata Rule

If you already have existing Traditional IRA balances (from prior rollups, SEP IRAs, or other sources), the IRS will require you to include those pre-tax balances in the tax calculation when you convert. This can significantly increase your tax liability. For a detailed explanation, see our Pro-Rata Rule guide.

What Federal Sources Actually Say

The Internal Revenue Code separately governs Traditional IRA contributions and Roth conversions. The 2017 Tax Cuts and Jobs Act conference report described taxpayers making nondeductible IRA contributions and later converting them, but that report is legislative history—not an IRS ruling, a named statutory approval of the “backdoor Roth,” or a safe harbor. Each transaction still has to satisfy its own rules. For a comprehensive guide, see our full Backdoor Roth article.

How Contributions Differ from Conversions and Rollovers

A common source of confusion is whether a conversion uses regular IRA contribution room. It does not. The $7,500/$8,600 annual limit applies to regular Traditional-and-Roth IRA contributions, not conversions or rollovers. Someone with an eligible $100,000 IRA balance could make an otherwise eligible $7,500 contribution and also convert $100,000 in the same calendar year, subject to the conversion tax and reporting rules.

Contributions (Subject to Annual Limits)

Contributions are new money you add from earned income. They're limited to $7,500/$8,600 per year, depending on age. You must have eligible earned income to contribute. If you overcontribute, you face the 6% penalty.

Conversions (Separate From the IRA Contribution Limit)

Conversions move eligible retirement-account money into a Roth IRA. They have no MAGI gate and do not use the $7,500/$8,600 regular IRA contribution limit. The practical ceiling is the amount actually available and eligible to convert. Pretax amounts are generally included in income, and basis, pro-rata aggregation and reporting determine the result.

Rollovers (Separate From the IRA Contribution Limit)

Rollovers move eligible money from a 401(k), 403(b), or other employer plan into an IRA. They do not use regular IRA contribution room; the amount depends on the source account, distribution eligibility and receiving-account rules. A rollover or conversion to Roth is generally taxable to the extent the moved funds were pretax.

Why This Matters

High-income earners and people with large retirement-account balances may use conversions because a conversion does not consume regular IRA contribution room. For example, someone could make an eligible $7,500 contribution and also convert $200,000 already held in an eligible Traditional IRA during the same calendar year. The contribution uses the annual IRA limit; the conversion does not, but its taxable amount and wider income effects still have to be reported.

The Saver's Credit: Free Money for Contributing

Here's an often-overlooked benefit that can turn your Roth IRA contribution into a government-subsidized savings strategy. The Retirement Savings Contributions Credit (commonly called the "Saver's Credit") gives lower and moderate-income taxpayers a tax credit (not just a deduction) for contributing to a Roth IRA.

How the Saver's Credit Works

Unlike a tax deduction, which simply reduces your taxable income, a credit reduces the actual tax you owe to the IRS. This makes the Saver's Credit significantly more valuable. The credit is based on your contributions and your income level.

Find your 2026 credit rate: Use your adjusted gross income (AGI), not your account balance. These cutoffs come from IRS Notice 2025-67.

Apply that rate to up to $2,000 of qualifying contributions per eligible person, after any required reduction for distributions. A joint return can include each spouse's separate calculation. The maximum calculated credit is $1,000 per person, but the usable credit is limited by the federal income tax available to offset on Form 8880. Use the form for the tax year you are filing; the linked form may still display prior-year income bands.

Looking ahead: For retirement contributions, the Saver's Match replaces this credit starting tax year 2027. Eligible ABLE-account contributions can still qualify for the Saver's Credit; they do not qualify for the Match.

Why This Matters: A Real-World Example

Maria and Carlos are both 45 and file jointly with 2026 AGI of $42,000. Each makes a $2,000 Roth IRA contribution. Assume both meet the eligibility rules and have no distributions that reduce their qualifying contributions. Their credit rate is 50% — but that is only the first step.

Important Limitations

The Saver's Credit has a few important restrictions:

• Nonrefundable: It cannot exceed the income tax available to offset. It can increase a refund of tax already withheld, but any unused credit is not paid out as extra cash.
• Student restrictions: Full-time students don't qualify for the credit.
• Age restrictions: Dependents and anyone under age 18 don't qualify.
• Contribution rules still apply: IRA contributions require enough eligible compensation, including a spouse's compensation when the joint-return spousal IRA rules apply.

If you're eligible, this credit is reported on Form 8880 when you file your tax return. Many people don't take advantage of this benefit because they don't know it exists, but if you're a lower or moderate-income earner, it's worth exploring with a tax professional.

What Counts as Earned Income? A Complete List

One of the most common Roth IRA questions is: "Does my income qualify?" The answer depends on whether you have earned income (or for a non-working spouse, whether your working spouse has earned income). Understanding exactly what counts is essential.

Income That QUALIFIES for Roth IRA Contributions

The following types of income count as earned income and allow you to make Roth IRA contributions:

• W-2 wages and salaries: Income from traditional employment, reported on Form W-2
• Net self-employment income: Income from Schedule C (sole proprietorship) or Schedule SE after business expenses
• Tips and commissions: Including service tips and commission-based income reported to your employer
• Bonuses: Annual bonuses, sign-on bonuses, and other one-time work-related payments
• Taxable alimony: From divorce or separation agreements executed BEFORE 2019 (Note: The Tax Cuts and Jobs Act eliminated alimony as earned income for post-2018 agreements)
• Nontaxable combat pay: Active duty military can elect to include nontaxable combat pay as earned income for Roth IRA contribution purposes (one of the few non-taxable income types that qualifies)
• Difficulty-of-care payments: Payments to foster care providers, added by the SECURE Act, count as earned income

Income That Does NOT Qualify

The following types of income do not count as earned income for Roth IRA contribution purposes:

• Rental income: Even if actively managed, rental income is considered passive
• Investment income: Dividends, interest, capital gains, and other portfolio returns
• Social Security benefits: Retirement benefits don't count as earned income
• Pension or annuity income: Distributions from pensions or annuities are not earned income
• Unemployment compensation: Even though it's taxable, it's not earned income for IRA purposes
• Alimony from post-2018 agreements: Alimony from separation agreements executed AFTER 2018 does not qualify as earned income
• Passive income from partnerships: Income from partnerships where you don't materially participate
• Scholarships and fellowships: Except when reported as W-2 income for services rendered

A Quick Reference Table

Roth IRA + Roth 401(k): Separate Limits, Separate Accounts

A significant source of confusion: Can you contribute to both a Roth IRA and a Roth 401(k) in the same year? Absolutely, yes. These are completely separate accounts with completely separate contribution limits.

The Two-Account Strategy

You can maximize contributions to both in a single year:

• Roth IRA: Up to $7,500 per year (under 50) or $8,600 (age 50+) for 2026
• Roth 401(k): Up to $24,500 per year (under 50) or $32,500 (age 50+ with $8,000 catch-up) for 2026

Combined total: An individual under 50 can contribute up to $32,000 in Roth accounts per year ($7,500 IRA + $24,500 401(k)) in 2026. At age 50 or older, this jumps to $41,100 ($8,600 IRA + $32,500 401(k) with catch-up).

A Critical Distinction: Separate Phase-Outs

Here's where many people get confused: The Roth IRA income phase-out does NOT affect Roth 401(k) eligibility.

Example: You earn $500,000 in MAGI, so your direct Roth IRA contribution limit is $0. A Roth 401(k) has no comparable MAGI eligibility gate; if your employer plan offers the feature and you are otherwise eligible, Roth elective deferrals can still fit within the plan’s $24,500 employee-deferral limit for 2026.

Common Misconceptions (and Why They're Wrong)

Misconception #1: "I max out my Roth 401(k), so I can't also do a Roth IRA."

Reality: Maxing out your Roth 401(k) doesn't prevent you from contributing to a Roth IRA. As long as you have earned income and your MAGI is below the IRA phase-out limit, you can contribute to both.

Misconception #2: "I contribute to a Roth IRA, so I can't also do a Roth 401(k)."

Reality: Contributing to a Roth IRA doesn't count against your Roth 401(k) limit. They're entirely separate buckets.

Misconception #3: "If my income is too high for a Roth IRA, it's also too high for a Roth 401(k)."

Reality: Roth 401(k) deferrals have no MAGI eligibility gate. The plan must offer the feature, and plan eligibility, compensation and annual elective-deferral limits still apply.

The Maximizer Strategy

For someone seeking maximum tax-free retirement savings, here's the opportunity: In a single year, you could contribute $7,500 to a Roth IRA and $24,500 to a Roth 401(k) (if age under 50), totaling $32,000 in Roth contributions for 2026. All of this money grows completely tax-free, and qualified withdrawals in retirement are never taxed. This is one of the most powerful wealth-building strategies available to middle and upper-income earners.

SECURE 2.0 §109: The Super Catch-Up (Ages 60–63) and Why It's a Roth 401(k) Feature Only

SECURE 2.0 Act §109 (effective for tax years beginning after December 31, 2024) creates a higher catch-up contribution limit for participants aged 60, 61, 62, and 63 in employer-sponsored plans—401(k), 403(b), and governmental 457(b). The enhanced catch-up is the greater of $10,000 or 150% of the regular catch-up, indexed for inflation. For 2026, the 401(k) super catch-up runs approximately $11,250. This does not extend to IRAs. For 2026 (per IRS Notice 2025-67), the IRA age-50 catch-up rose to $1,100 — the first indexation under SECURE 2.0 §108, which added $100-rounded inflation indexing to IRC §219(b)(5)(B).

This creates a subtle planning asymmetry. If you're 60–63 and have a Roth 401(k) at work, you can contribute $24,500 + $11,250 = $35,750 on the Roth side alone in 2026. If you're self-employed and rely on an IRA, your Roth contribution ceiling is $8,600. For anyone approaching 60 with a Roth-friendly employer plan, loading the 401(k) to its enhanced super catch-up is materially more valuable than filling the Roth IRA first.

A quirk worth noting: the super catch-up is age-specific, not age-minimum. It applies only during the four calendar years 60, 61, 62, and 63. At age 64, the catch-up reverts to the standard age-50+ limit ($8,000 for 401(k)s in 2026). Plan this as a "four-year window" of accelerated savings capacity.

SECURE 2.0 §603: the Roth Catch-Up Mandate for High Earners

Section 603 of SECURE 2.0 originally required that catch-up contributions for participants earning more than $145,000 (indexed) in the prior year must be made to a Roth account, not pre-tax. Originally scheduled for 2024, Notice 2023-62 delayed the rule to 2026; final regulations (TD 10007, published September 16, 2025) confirmed the 2026 effective date and clarified key implementation details. For 2026, the indexed threshold is $150,000 of prior-year (2025) FICA wages per Notice 2025-67.

What the mandate means operationally: If your 2025 FICA wages from this employer exceeded $150,000, your plan must direct 100% of your 2026 catch-up contribution to a Roth 401(k) subaccount. Pre-tax catch-ups are disallowed for you. If your plan does not offer a Roth 401(k) at all, you cannot make any catch-up contribution—the rule eliminates pre-tax catch-ups rather than substituting them.

The $150,000 threshold is measured per-employer, not total wages. If you have two W-2 jobs, each with $100,000 in wages, you are below the threshold at both and can still make pre-tax catch-ups at either. This creates a minor arbitrage for high earners with multiple employers. The threshold is also "prior-year," meaning 2026 catch-ups look at 2025 W-2 FICA wages. New hires in 2026 with no 2025 wages from the employer can make pre-tax catch-ups without regard to their 2026 salary.

For Roth-IRA planning specifically: the §603 rule doesn't touch the IRA catch-up, which remains fully flexible (you can contribute to Roth IRA or Traditional IRA regardless of income, subject to the usual MAGI phase-outs).

How the Inflation Indexing Actually Works

The Roth IRA contribution limit is indexed under IRC §219(b)(5)(D), which uses the Consumer Price Index for Urban Consumers (CPI-U) average for the 12-month period ending August 31. The base was $5,000 set by Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), adjusted by the cumulative CPI-U change since 2008 (the year IRA limits were first indexed under Pension Protection Act of 2006).

The IRS rounds the base-limit result down to the nearest $500. This is why contribution limits move in jumps rather than smoothly. In years of modest inflation, rounding can "swallow" an entire year's increase: CPI-U rose between 2023 and 2024 enough to justify a mathematical limit near $7,240, but rounding down left the 2024 and 2025 announced limit at $7,000. The cumulative inflation through 2025 finally crossed the next $500 threshold, producing the 2026 limit of $7,500 announced in Notice 2025-67.

The IRA catch-up ($1,000 statutory under §219(b)(5)(B)) was not indexed until SECURE 2.0 §108, which began indexing it with a $100 rounding rule starting in 2024. Accumulated inflation produced the first above-$1,000 catch-up for 2026 at $1,100.

The IRS typically announces new limits in late October or early November (Rev. Proc. announcement) for the following tax year. Notice 2025-67 was released November 2025 for tax year 2026.

Return of Excess Contributions: the Six-Month Window and the NIA Calculation

If you discover you've overcontributed (typically because MAGI came in higher than projected), IRC §408(d)(4) provides a "return of excess contribution" mechanism: withdraw the excess plus net income attributable (NIA) by the due date of your return, including extensions. The excess returned is not included in income; positive NIA is taxable. SECURE 2.0 §333 eliminated the 10% additional tax on NIA distributed through this timely correction process.

NIA means the gain or loss assigned to the contribution being returned. Under Treas. Reg. §1.408-11 and IRS Publication 590-A, Worksheet 1-4, the formula is:

NIA = contribution being returned × (adjusted closing balance − adjusted opening balance) ÷ adjusted opening balance.

• Adjusted opening balance: the IRA's value just before the contribution, plus that contribution and other contributions or transfers into the IRA during the calculation period.
• Adjusted closing balance: the IRA's value just before removal, plus distributions or transfers out during that period. Recharacterizations also count in the appropriate direction.

For example, suppose an IRA held $4,800 before a $1,600 contribution and is worth $7,600 at correction, with no other money moving in or out. If $400 of the contribution must be returned, the opening balance is $6,400. NIA = $400 × ($7,600 − $6,400) ÷ $6,400 = $75. The custodian returns $475 total. A loss can instead reduce the amount returned; that is not an IRS reimbursement. Ask the custodian to calculate the actual adjustment, especially when there were multiple transactions. See our excess-contribution guide for the correction paths.

A second path is recharacterization of the contribution to a Traditional IRA (Treas. Reg. §1.408A-5). You tell the custodian to treat the contribution as if originally made to a Traditional IRA. This was previously available for conversions too, but the Tax Cuts and Jobs Act eliminated conversion recharacterization in 2017. Contribution recharacterization remains fully available and is often the better path when you're above the Roth income limit but could have made a deductible or non-deductible Traditional IRA contribution instead.

What Counts as Earned Income: the Deemed Compensation Rules

You need "taxable compensation" (earned income) to contribute to a Roth IRA. The IRS defines this narrowly under IRC §219(f)(1)—but it expands via several "deemed compensation" rules that many taxpayers overlook:

Nontaxable Combat Pay

Under IRC §219(f)(7), combat pay excluded from gross income under §112 still counts as compensation for IRA-contribution purposes. See the Military section below.

Alimony Under Pre-2019 Divorces

Alimony received under divorce or separation agreements executed before January 1, 2019 is deemed compensation under IRC §219(f)(1). For agreements executed on or after January 1, 2019 (post-TCJA), alimony is no longer taxable and no longer counts as compensation for IRA purposes. A 2018-divorced recipient can still use alimony to fund Roth; a 2020-divorced recipient cannot.

Graduate Student Fellowship Income (SECURE 2.0 §106)

Before 2020, graduate students with fellowship or stipend income generally could not contribute to a Roth IRA because the income was reported on Form 1098-T rather than W-2 and was not considered "earned." SECURE Act 1.0 §106 (effective 2020) treated "qualified fellowship" income as compensation for IRA purposes, opening Roth IRA contributions to millions of PhD students and postdocs. This is one of the most powerful demographic expansions of Roth eligibility in decades: a 25-year-old PhD student with a $32,000 stipend can now contribute $7,500 to a Roth IRA for 2026, compounding tax-free for 40+ years.

Disability Payments

Social Security disability benefits, workers' compensation, and most forms of disability income are not earned income for Roth contribution purposes. This is a painful asymmetry for individuals who become permanently disabled and can no longer contribute to retirement accounts despite receiving income. The one exception: disability insurance payments that replace salary from a self-employed individual's own business may count if structured through a business continuation plan—narrow, and typically requires tax counsel.

Military and Combat Zone Special Rules

Active duty military personnel stationed in combat zones receive special tax treatment under the law, including unique advantages for Roth IRA contributions.

Nontaxable Combat Pay Election

One of the most valuable benefits: Military service members in a combat zone can elect to treat nontaxable combat pay as earned income for Roth IRA contribution purposes. This is unusual because normally, nontaxable income doesn't count as "earned income."

What this means in practice: A soldier in a combat zone with minimal taxable wages but significant nontaxable combat pay can use that combat pay to fund a Roth IRA contribution. This is one of the few situations where non-taxable income qualifies for an IRA contribution.

Example: A soldier earns $5,000 in taxable base pay and $15,000 in nontaxable combat pay while stationed in a combat zone. By electing to include the combat pay as earned income, the soldier has $20,000 in earned income and can contribute $7,500 to a Roth IRA for 2026.

Special Disaster and Combat-Zone Relief

A routine Form 4868 filing extension does not extend the IRA contribution deadline. Different rules apply when the IRS postpones deadlines for a federally declared disaster or when IRC §7508 combat-zone relief applies. Those special provisions can extend the time for an IRA contribution, but the taxpayer must satisfy the relief notice or combat-zone requirements; do not assume the ordinary October filing-extension date controls.