Tax Tip 2026-76: Saving for retirement? IRAs are an option

Issue Number: Tax Tip 2026-76

Saving for retirement? IRAs are an option

Whether retirement is many years away or just around the corner, knowing available savings options is important for taxpayers to plan for their financial future. Individual retirement accounts are just one of the many ways to save, and they also offer tax benefits by letting earnings grow tax deferred. Taxpayers should consider how an IRA may fit into their long-term financial plans.

Let’s look at a couple of the most common types of IRAs.

Traditional IRA

• Taxpayers may be able to deduct their contributions to an IRA, if they qualify.
• There’re annual limits to contributions depending on the person's age and the type of IRA.
• Generally, the money in a traditional IRA isn't taxed until it's withdrawn.
• If a taxpayer withdraws money before age 59 ½, there may be a 10% additional tax, unless they qualify for an exception.
• Usually, taxpayers must start taking the minimum withdrawals from the IRA when they reach a certain age. Special distribution rules apply for IRA beneficiaries.

Roth IRA
Same rules as a traditional IRA, but there are differences:

• Contributions are not deductible and are made with after-tax funds.
• Qualified distributions are tax free.
• There is no required minimum distribution.

2026 contribution limits for traditional and Roth IRAs
For 2026, taxpayers can contribute a total of up to $7,500. Taxpayers who are 50 or older can contribute an additional $1,100, for a total of $8,600. The contribution limit applies to the combined amount contributed to traditional and Roth IRAs and can't exceed the taxpayer’s taxable compensation for the year.

More information

• Publication 590-A, Contributions to Individual Retirement Arrangements
• Publication 590-B, Distributions from Individual Retirement Arrangements

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