5 Roth IRA Myths to Avoid Falling for in 2026

One of my favorite retirement accounts is a Roth IRA because of its unique tax benefits. Unlike a 401(k) or traditional IRA, you contribute after-tax money into a Roth IRA and then take tax-free withdrawals in retirement. It's a tax break that can easily save the average person thousands in taxes in retirement.

A unique tax break also means that Roth IRAs operate differently from other retirement accounts, which in turn leads to more misunderstanding. To hopefully clear up some of the confusion, here are five common myths about a Roth IRA that people should stop believing.

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Myth 1: You must have an employer to have a Roth IRA

To have a standard 401(k) or 403(b), you need to have an employer that officially sponsors the plan. This isn't the case with a Roth IRA. Anyone can open one on their own, just as you would with a bank or brokerage account.

This is a great way for self-employed people and independent contractors to take advantage of a retirement account. They're being proactive with their retirement savings (and getting a tax break for doing so).

One thing to note is that money contributed to a Roth IRA must be "earned," so you can't contribute money from sources such as Social Security, investment income, or pensions.

Myth 2: You must take required minimum distributions from a Roth IRA

Accounts like 401(k)s, 403(b)s, and traditional IRAs have required minimum distributions (RMDs) that kick in the year you turn 73. You must take your RMDs by Dec. 31 to avoid penalties, except in the year you turn 73, when you have until April 1 of the following year.

Since the money you contribute to a Roth IRA has already been taxed, Roth IRAs don't require RMDs. You can keep the money in the account for your whole life, if you so choose.

For people who don't need the income for retirement, keeping money in a Roth IRA is a great way to let it continue compounding and eventually pass it on to a beneficiary who can choose to keep the money in the account (and ideally growing) for up to another 10 years.

Myth 3: You can't withdraw early from your Roth IRA

Ideally, you wouldn't touch money in your retirement accounts until you retire, but life happens. In a Roth IRA, you can withdraw your contributions -- but not earnings -- at any time without facing an early withdrawal penalty (which is generally 10% of the withdrawn amount).

For example, let's imagine you contributed $20,000 to your Roth IRA and the balance has grown to $25,000. In this case, you could withdraw the $20,000 at any time, but not the $5,000 you earned in profits. Withdrawing the earnings would trigger a tax bill and the 10% early withdrawal penalty.

Once you turn 59 1/2 years old and have made your first Roth IRA contribution at least five years prior, you can withdraw earnings tax-free and penalty-free.

Myth 4: Your investment options are limited in a Roth IRA

When you have a 401(k), your plan administrator provides investment options for you to choose from. While some people appreciate having to make fewer decisions, others may find it limiting in crafting their portfolio as they'd prefer.

Roth IRAs are closer to standard brokerage accounts because you can invest in virtually any stock, exchange-traded fund (ETF), or bond. This leaves room open to invest in a company you believe highly in, an industry-specific ETF, or Treasury bonds.

Myth 5: High earners can't have a Roth IRA

It's true that Roth IRAs have income limits for contributions. In 2026, the limits are $168,000 if you're single, $252,000 if you're married and filing jointly, and $10,000 if you're married and filing separately.

If you find yourself over the limit, you can still get a Roth IRA by using the backdoor Roth IRA method. When you go this route, you'll initially contribute to a traditional IRA (which doesn't have income limits) and then convert the account into a Roth IRA.

When you do this, you'll need to pay taxes on the amount you're converting, but it could be worth it if you have time for your money to continue growing and then take tax-free withdrawals in retirement. If you're planning to retire soon, it might not be the best move since you won't have as much time for your money to grow post-conversion.

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