Why IRA Contributions Still Matter: A Practical Guide to Today’s Limits and Long-Term Benefits

Individual Retirement Accounts (IRAs) remain a reliable way to build retirement security, even as workplace plans like 401(k)s evolve. Understanding IRA contribution basics is an essential first step, helping turn today's savings into greater flexibility and peace of mind tomorrow.

What an IRA Is

An IRA is a special account to help you save for retirement with tax breaks. The most common types—traditional and Roth IRAs—offer tax advantages, but each has specific rules for contributing and withdrawing money.

• With a traditional IRA, your money can grow tax-deferred, and you might be able to deduct your contributions from your taxes right now. When you eventually withdraw money in retirement, you’ll pay regular income tax on those amounts.
• A Roth IRA is different: you contribute taxed money, but withdrawals in retirement are typically tax-free if you follow the rules.

Contribution Limits in 2025 and 2026

Each year, the IRS sets a maximum you can contribute to all your IRAs combined. These limits apply per person, not per account, and can change.

• In 2025, you can contribute up to $7,000 to your IRAs if under 50; $8,000 if 50 or older.
• In 2026, limits increase to $7,500 for those under 50 and $8,600 for those 50 or older.

If you have a high income, your ability to contribute to a Roth IRA or deduct traditional IRA contributions may be limited, especially if you have a workplace plan.

Why IRAs Still Matter

IRAs help fill gaps left by workplace retirement accounts and often offer more tax benefits and investment choices than some 401(k)s.

• You can save for retirement with an IRA, whether or not your employer offers a plan. IRAs also let you save more on top of your workplace plan.
• Roth IRAs let you withdraw money tax-free in retirement and have no required withdrawals in your lifetime, which can help with long-term planning or leaving a legacy.

Coordination With Workplace Plans

Combining IRA contributions with workplace plans lets you be more strategic about your savings. The right approach depends on your taxes, retirement timeline, and future income plans.

• Many people first put enough into their workplace plan to get any company match (so they don’t leave free money on the table), then use an IRA for additional savings or for more investment and tax choices.
• Others might prefer a Roth IRA for the potential of tax-free income later, while still using a traditional 401(k) or traditional IRA to lower their taxes today—if they’re eligible.

Getting Started and Following Steps

To start an IRA, choose a provider, select investments, and decide on one-time or automatic contributions. Your best path depends on your risk tolerance, investment preferences, and overall finances.

Before choosing an IRA, consider your current and future tax brackets and retirement goals. Crafting the right plan helps ensure your savings support your goals.

Disclosures
This material is for informational and educational purposes only and is not intended as individualized investment, tax, or legal advice. The information herein does not constitute a recommendation to buy, sell, or hold any security or to pursue any specific IRA or retirement strategy.​

All examples are hypothetical and are for illustrative purposes only; they do not represent any specific investment or strategy. Tax laws and regulations are subject to change, and their impact on you will depend on your individual circumstances. You should consult with a qualified tax professional or attorney regarding your personal tax situation and speak with a financial professional before making any investment or retirement-planning decisions.

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results, and there is no assurance that any strategy will be successful in achieving its objectives. IRAs are subject to eligibility rules, contribution limits, and distribution requirements set by the Internal Revenue Service, and penalties and taxes may apply to early or non-qualified withdrawals.

Registration of an investment adviser does not imply a certain level of skill or training. Any views or opinions expressed are subject to change without notice and may differ from the views of other professionals or from future guidance or regulations.​

Sources

• IRS – IRA contribution limits: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits​
• IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs): https://www.irs.gov/publications/p590a​
• IRS news release on 2026 IRA and 401(k) limits: https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500​
• Fidelity – IRA contribution limits overview: https://www.fidelity.com/learning-center/smart-money/ira-contribution-limits​
• Charles Schwab – Roth IRA contribution limits: https://www.schwab.com/ira/roth-ira/contribution-limits​
• NerdWallet – Roth vs. traditional IRA: https://www.nerdwallet.com/retirement/learn/roth-or-traditional-ira-account​
• Investor.gov – Individual Retirement Accounts (IRAs): https://www.investor.gov/additional-resources/retirement-toolkit/self-directed-plans-individual-retirement-accounts-iras​
• Investor.gov – IRA glossary entry: https://www.investor.gov/introduction-investing/investing-basics/glossary/individual-retirement-account-ira​
• Vanguard – Roth vs. traditional IRA: https://investor.vanguard.com/investor-resources-education/iras/roth-vs-traditional-ira​
• SEC – The role of the SEC and investor protections: https://www.investor.gov/introduction-investing/investing-basics/role-sec​

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