What is a Roth IRA and what are its benefits?
Executive Director, J.P. Morgan Wealth Management Product & Experiences
- What is a Roth IRA: A Roth IRA is a type of retirement account into which you may be able to make after-tax, non-deductible contributions and then potentially take qualified distributions tax-free.
- Contribution limits for Roth IRAs: Keep in mind, there are income limitations that determine your contribution eligibility. Please refer to the IRS website for applicable limits.
- If you meet the IRS criteria at the time of your withdrawals, your distributions will not be taxed. Please refer to the IRS website for applicable criteria or speak to a tax professional.
- Unlike a traditional IRA, where contributions may be tax-deductible, contributions to a Roth IRA are not tax-deductible.
- Please note this article will discuss Roth IRAs for the original owner; inherited Roth IRAs follow rules set by the IRS that won’t be covered in this article.
What if we told you there’s a retirement account that offers several investment options to choose from, and allows qualifying withdrawals tax-free before or while you are in retirement? We’re talking about Roth IRAs. A Roth IRA is a type of individual retirement account, or IRA, that is funded by after-tax, non-deductible contributions and earnings, if any. If eligible, once funds are contributed to a Roth IRA they can typically be invested in a variety of products including mutual funds, stocks, bonds, and ETFs. Distributions may be tax-free if the requirements for a qualified distribution are met (including that the withdrawal is made after the 5-year period beginning with the first tax year for which a contribution was made to a Roth IRA set up for your benefit). Please visit the IRS website for more information on qualified distributions or speak to a tax professional.
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We’re here to help you plan for retirement. A Roth IRA can help you prepare for retirement with tax-deferred growth potential.
A Roth IRA can be a useful strategy for people who anticipate being in a higher tax bracket once they retire or for people who want to take tax-free withdrawals once they qualify. Some people also have a goal to provide tax-free income to their beneficiaries.
Contribution limits for Roth IRAs
There is an overall annual IRA contribution limit of a specific dollar amount or, if less, your taxable compensation for the year. The IRS also restricts how much you may be able to contribute to a Roth IRA based on your tax filing status and taxable income. These contribution and income limits are changed periodically. In 2025, the contribution limit is $7,000 per year for individuals under the age of 50 and $8,000 for individuals age 50 and over. Additionally, in 2025, a single individual with an income less than $150,000 can contribute to a Roth IRA up to the contribution limit; however, there is a contribution phase-out up to an income of $165,000. Similarly, an individual who is married filing jointly has income limitations of less than $236,000 to contribute the full amount and up to $246,000 for a phased-out contribution.
Options for funding a Roth IRA
There are a few ways you can fund your Roth IRA, which include:
- Annual contributions. You can make contributions for the current year any time until the federal tax-filing deadline (not including extensions), which falls in the following year. Roth IRAs are funded with after-tax dollars. As a result, contributions to a Roth IRA are not tax-deductible. In addition to your standard annual contribution, you may have the option to fund a spousal Roth IRA, which allows you to fund a Roth IRA on behalf of your spouse, if you qualify. Contributions to a spousal Roth IRA are subject to the married filing jointly contribution eligibility income limits as well as the annual contribution limit described above.
- Roll over. If eligible, you can also choose to roll over funds into a Roth IRA from a prior employer-sponsored Roth retirement account.
- Roth conversion. Another option for funding a Roth IRA is converting assets from a traditional IRA or pre-tax 401(k) to a Roth. Currently, even if you exceed the income limit for annual Roth IRA contributions, you may have an option to fund a Roth IRA by converting assets from a traditional IRA or pre-tax 401(k) to a Roth IRA. Keep in mind, movement from a traditional IRA or pre-tax 401(k) to a Roth IRA is taxed in the year of the conversion. Additionally, a conversion to a Roth IRA is not reversible, meaning you cannot convert a Roth IRA back to a traditional IRA or pre-tax 401(k).
Withdrawal requirements
Withdrawals from Roth IRAs are not taxed if you meet the withdrawal criteria for a “qualified distribution” (including that the withdrawal is made after the five-year period beginning with the first tax year for which a contribution was made to a Roth IRA set up for your benefit).
Unlike a traditional IRA, there are no required minimum distributions (RMDs) for Roth IRAs of original owners during their lifetime. However, inherited Roth IRAs are subject to RMDs.
To learn more about Roth IRAs, including funding options, you should visit the IRS website or speak with a tax professional.
Frequently asked questions
You can open a Roth IRA at an investment firm, including J.P. Morgan Wealth Management. You can do this online, or work with a financial advisor (online or in person). Not all banks will offer an IRA, as they are an investment vehicle, so make sure you are working with a bank that offers financial products like retirement accounts.
You can withdraw your contributions from a Roth IRA at any time without penalty. Starting at age 59.5 if you’ve had a Roth account for at least five years you can withdraw investment growth without paying any taxes. If you withdraw any investment earnings before age 59.5, you will pay ordinary income tax on those dollars and an additional 10% early withdrawal tax (except if the withdrawal is for certain cases like buying a first home, due to a disability as defined by the IRS or another IRS exemption).
There is no limit to the number of Roth IRAs you can have. You can open multiple Roth IRA accounts, but you must adhere to the annual contribution limits for each account.
No, Roth IRA contributions aren’t tax-deductible. The money you contribute to a Roth IRA has already been taxed.
In 2025, the max contribution to a Roth IRA is $7,000. You can contribute $8,000 if you’re 50 or older.
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