If you’re planning for retirement, chances are you’ve come across the Roth IRA. But this isn’t just another savings account—it’s one of the most powerful tools available for building tax-free income in retirement.

By contributing money you’ve already paid taxes on (after-tax dollars), you set yourself up to withdraw both contributions and growth tax-free down the road. That can give you some serious flexibility—and peace of mind—when it comes time to draw from your retirement savings.

And if you’re someone with a long investment time horizon, a Roth IRA can be a great place to hold higher-growth (and yes, higher-risk) investments, since all those gains grow tax-free.

Why a Roth IRA Might Be a Smart Move

Picture this: you’re in retirement, and you want to take out some money—but you don’t want it to affect your tax bracket, your Medicare premiums, or force you to withdraw more than you need. That’s exactly where a Roth IRA shines.

Unlike traditional retirement accounts, a Roth IRA gives you:

• Tax-free withdrawals in retirement
• No required minimum distributions (RMDs)
• The flexibility to manage your income more strategically

That kind of flexibility can be a game-changer when it comes to managing taxes in retirement.

Roth IRA Contribution Limits (2025)

Here’s what you can contribute for the 2025 tax year:

• Under age 50: Up to $7,000
• Age 50 or older: Up to $8,000 (thanks to a $1,000 catch-up contribution)

These limits are per person and cover your total contributions to all IRAs combined—so keep that in mind if you’re juggling a Traditional and a Roth IRA. For individuals maxing out their 401(k)’s/403(b)’s at work, the above contribution limits are in addition to the 401(k) contribution limits. 

Also worth noting: spouses who don’t earn income can still make IRA or Roth IRA contributions in their own name, as long as their spouse has sufficient earned income. This is commonly referred to as a spousal IRA and can be a great way to boost retirement savings as a household.

What’s Great About a Roth IRA

Here are some of the biggest benefits:

• Tax-Free Withdrawals: As long as you’re 59½ and have had the account for at least five years, you can take out both contributions and earnings without paying a dime in taxes.
• No RMDs: Unlike a Traditional IRA, the IRS doesn’t force you to start withdrawing money at a certain age. That means more control—and more time for your money to grow.
• Access to Contributions Anytime: Need your money back early? You can take out your contributions (not earnings) at any time without taxes or penalties.
• Tax Planning Flexibility in Retirement: Let’s say one year you need extra cash for a home project or unexpected medical bill. Instead of taking more from a Traditional IRA to cover the expense—which could bump you into a higher tax bracket—you can pull from your Roth and keep your taxable income low.
• Helpful for Estate Planning: Heirs who inherit Roth IRAs generally won’t owe taxes on withdrawals (unlike Traditional IRAs). And while both have to be emptied within 10 years, Roths can be a much more tax-efficient gift.

 A Few Drawbacks to Keep in Mind

No account is perfect, and Roth IRAs have a few downsides too:

• No Tax Break Upfront: Since you’re contributing after-tax dollars, you don’t get a tax deduction now like you would with a Traditional IRA or 401(k).
• Income Limits: High earners may not qualify to contribute directly to a Roth IRA (but there can be a workaround for this, which we’ll get to).
• Five-Year Rule: To access earnings tax-free, you need to have had the account open for five years and be 59½ or older.
• Lower Contribution Limits: Compared to some other retirement accounts, the Roth IRA caps are relatively low—so it may not be enough on its own for big savers.

Backdoor Roth IRA: A Workaround for High Earners

If you make too much to contribute directly to a Roth IRA, there’s still a strategy you can use called a Backdoor Roth IRA. It sounds more complicated than it is:

1. Step One: You contribute to a Traditional IRA (a non-deductible contribution, which should be reported on IRS Form 8606 at tax time)
2. Step Two: You convert that Traditional IRA to a Roth IRA.

You might owe some tax on any earnings that occur between the time you contribute and convert, but the process itself is perfectly legal and widely used. Generally, backdoor Roth IRA contributions should not be completed if you have existing IRA balances (Traditional, SEP, or SIMPLE IRAs).  It is important that backdoor Roth contribution is reported properly for taxes. I have seen mistakes made where clients failed to communicate a backdoor Roth to their accountant, and where self-preparers improperly reported the backdoor Roth as a taxable distribution.  Before completing a backdoor Roth contribution, you may want to speak with your financial and tax professional.

There’s also a more advanced strategy known as the Mega Backdoor Roth, which is available through certain employer-sponsored retirement plans. This allows you to make significantly larger Roth contributions using after-tax dollars—potentially well beyond the standard IRA or Roth IRA limits. While not commonly offered, it’s a powerful, tax-advantaged savings option when available. It is worth checking with your 401(k) provider to see if your plan supports this feature.

When a Roth IRA Really Stands Out

In my experience working with clients, Roth IRAs tend to shine in a few specific situations:

1. You’ve Maxed Out Other Retirement Accounts

Already contributing the max to your 401(k) and looking to save more? A Roth IRA gives you a way to keep saving in a tax-advantaged account—and with more investment options than most employer plans.

2. You’re Early in Your Career (or Helping Someone Who Is)

Roth IRAs are great for young professionals in lower tax brackets. You receive no tax break on the contribution now while your rate is lower, and enjoy tax-free growth for decades to come. It can also be a smart move for parents helping their adult children start saving early.

3. You Want More Control Over Your Retirement Income

Roth withdrawals don’t count as taxable income, which gives you more control over your tax bracket and Medicare premiums IRMAA surcharges. If you have an unexpected expense in retirement, tapping a Roth to cover the expense can help avoid pushing you into a higher tax tier.

4. You’re Thinking About Legacy Planning

If you’re planning to leave money to heirs, a Roth IRA can be more tax-friendly than a Traditional IRA. Beneficiaries must still empty the Roth IRA account within 10 years—but they generally won’t owe income tax on those distributions.

5. Planning Ahead for a Surviving Spouse

One thing people often overlook: tax brackets for single filers can be less favorable than for married couples. Doing Roth “conversions” while both spouses are alive may help lower the surviving spouse’s future tax burden.

Final Thoughts

The Roth IRA is a versatile, tax-smart account that can play a key role in your retirement strategy—especially when used alongside other planning tools.

Whether you’re early in your career, heading into retirement, or somewhere in between, a Roth IRA might offer more benefits than you think. As always, it’s best to work with a financial advisor or tax professional to make sure it fits your specific situation.