IRAs are the most widely held retirement accounts in the US, and the rules governing contributions, deductibility, distributions, and inheritance have been substantially changed by SECURE Act (2019) and SECURE 2.0 (2022). The RMD age is now 73. The inherited IRA stretch has been eliminated for most non-spouse beneficiaries, replaced by a mandatory 10-year distribution period. Understanding these rules determines how efficiently retirement assets are accumulated, distributed, and transferred to heirs.
Contribution limit: $7,000 per person ($8,000 if age 50+)
Traditional IRA deductibility phaseout (covered by workplace plan): $79,000-$89,000 (single) / $126,000-$146,000 (MFJ)
Roth IRA contribution phaseout: $150,000-$165,000 (single) / $236,000-$246,000 (MFJ)
RMD starting age: 73 (SECURE 2.0); increases to 75 for those born after 1959
QCD limit: $111,000 per taxpayer (indexed annually, age 70.5+)
Anyone with earned income can contribute to a traditional IRA up to the annual limit. Whether the contribution is deductible depends on whether the taxpayer (or spouse) is covered by a workplace retirement plan and their income level.
| Situation | Deductibility (2026) |
|---|---|
| Neither spouse covered by workplace plan | Fully deductible regardless of income |
| Taxpayer covered by workplace plan - single | Full deduction below $79,000 AGI; phases out $79K-$89K; no deduction above $89K |
| Taxpayer covered by workplace plan - MFJ | Full deduction below $126,000 AGI; phases out $126K-$146K; no deduction above $146K |
| Spouse not covered but other spouse is - MFJ | Full deduction below $236,000 AGI; phases out $236K-$246K; no deduction above $246K |
Non-deductible contributions to a traditional IRA still make sense in some situations - the basis is tracked on Form 8606 and recovered tax-free on distribution. However, the pro-rata rule (discussed below) complicates the recovery when the taxpayer has other pre-tax IRA balances.
Roth IRA contributions are made with after-tax dollars. No deduction. But qualified distributions from a Roth IRA are completely tax-free - including all earnings. There are no RMDs on a Roth IRA during the owner's lifetime. These features make the Roth IRA the most valuable retirement account for most taxpayers who qualify.
The catch: direct Roth contributions phase out at higher income levels (see numbers above). Taxpayers above the phaseout cannot make direct Roth contributions - but can use the backdoor Roth strategy.
The backdoor Roth allows high-income taxpayers to effectively make Roth contributions despite the income limits. Steps: make a non-deductible traditional IRA contribution ($7,000), then convert the traditional IRA to Roth. If the taxpayer has no other pre-tax IRA balances, the conversion is essentially tax-free (only the small amount of earnings between contribution and conversion is taxable).
SECURE 2.0 (P.L. 117-328) increased the RMD starting age to 73 for individuals who turn 72 after December 31, 2022. Individuals born after December 31, 1959 will have an RMD starting age of 75. Roth IRAs do not have RMDs during the owner's lifetime.
RMDs are calculated by dividing the prior December 31 account balance by a life expectancy factor from the IRS Uniform Lifetime Table (Publication 590-B). The calculation must be performed separately for each IRA, though distributions can be aggregated across IRAs of the same type.
The SECURE Act (2019) eliminated the ability to "stretch" inherited IRA distributions over the beneficiary's lifetime for most non-spouse beneficiaries who inherit after December 31, 2019. Instead, the account must be fully distributed within 10 years of the original owner's death.
| Beneficiary Type | Distribution Rule |
|---|---|
| Spouse | Can treat as own IRA (roll over), delay RMDs to age 73, stretch over own lifetime. Most favorable treatment. |
| Eligible Designated Beneficiary (EDB) | Can stretch over own life expectancy. EDBs: surviving spouse, disabled or chronically ill individuals, individuals not more than 10 years younger than the decedent, minor children of the decedent (until age of majority, then 10-year rule kicks in). |
| Non-EDB (most adult children, siblings, friends) | 10-year rule: account must be fully distributed by December 31 of the 10th year after the year of death. Annual RMDs required during years 1-9 if the decedent had already reached RMD age. |
| Non-person beneficiary (trust, estate, charity) | 5-year rule if decedent hadn't started RMDs; 10-year rule if decedent had reached RMD age (with some exceptions for see-through trusts). |
Converting traditional IRA balances to Roth IRA triggers ordinary income tax on the converted amount in the year of conversion. The long-term benefit: no future RMDs, tax-free growth, and tax-free distributions for heirs. The optimal conversion strategy is to convert in years when income is temporarily lower - retirement before Social Security begins, years with large deductions, or years with capital losses to offset.
The "fill the bracket" approach converts enough each year to fill up the current tax bracket without crossing into the next. For a married couple in the 22% bracket with $111,000 of taxable income, filling to the top of the 22% bracket ($211,400 in 2026, Rev. Proc. 2025-32) allows converting $100,400 of IRA balance at 22% - locking in that rate before RMDs potentially push income into higher brackets in future years.