Core Points - Roth IRAs allow tax-free withdrawals of contributions and earnings at retirement, provided five years have passed since the first contribution [1][4] - Beneficiaries of Roth IRAs do not owe taxes on inherited accounts, making them advantageous for estate planning [2] - Early withdrawals of investment earnings may incur income tax and a 10% penalty, although exceptions exist for certain qualified expenses [3][5] Contribution and Income Limits - In 2026, the contribution limit for Roth IRAs is set to increase to $7,500, with an additional catch-up contribution of $1,100 for individuals aged 50 and older [9] - Single filers can contribute to a Roth IRA if their modified adjusted gross income is below $153,000, with reduced contributions allowed up to $168,000; for married couples filing jointly, the limits are $242,000 and $252,000 respectively [16] Investment Options and Strategies - Roth IRAs can be used for a variety of investments, including stocks, mutual funds, and ETFs, which typically offer higher returns compared to traditional bank accounts [3][18] - The Roth IRA is a favorable option for rolling over funds from a Roth 401(k), allowing for broader investment choices without tax liabilities [8] Comparison with Traditional IRAs - Unlike traditional IRAs, Roth IRAs do not provide an upfront tax deduction, but allow for tax-free withdrawals in retirement [6][13] - Traditional IRAs have no income restrictions for contributions, but tax deductions are subject to income limits if the individual has a retirement plan at work [14][17]