IRAs from first contribution to final withdrawal: Traditional or Roth, backdoor and mega backdoor Roth, conversions, early withdrawals, RMDs and inherited IRAs

An IRA (individual retirement arrangement) is a retirement account you open yourself at a brokerage or bank. The two main types are traditional ("maybe deductible now, taxed later") and Roth ("taxed now, tax-free later"). SEP and SIMPLE IRAs are IRAs that small business owners use for themselves and their employees; inherited and rollover IRAs are named for where the money came from. A 401(k), 403(b) or 457(b) is an employer plan with higher limits and rules set by the plan document.

• You can have an IRA and a 401(k): A workplace 401(k) doesn't stop you from opening or funding an IRA. It only affects whether a traditional IRA contribution is deductible (see the income limits below).
• Which one for a small business owner: If it's just you (and your spouse), a Solo 401(k) usually lets you save more than a SEP, because the $24,500 employee deferral isn't a percentage of pay. S corporation owners are limited by their W-2 wages (see yclcpa.com/scorp). With employees, a SEP must give every eligible employee the same percentage, and a SIMPLE requires a set match.
• You can't borrow from an IRA: A 401(k) may allow loans; an IRA doesn't. Using IRA money to buy a home for yourself or family, or pledging it as collateral, is a prohibited transaction that can disqualify the whole account.

Description: The key points in an IRA's life, left to right, with the rule to watch at each one.

Stage	When	What to do / watch
1. Open	Any age, as long as you have earned income	Choose traditional or Roth; name beneficiaries
2. Contribute	January 1 through April 15 of the next year	$7,500 for 2026, $8,600 at 50+; report nondeductible amounts on Form 8606
3. Convert	By December 31 of any year	The converted amount is ordinary income; all traditional, SEP and SIMPLE IRA balances on December 31 enter the pro-rata calculation
4. Age 59½	From the day you reach 59½	No more 10% additional tax; Roth withdrawals after five years are fully tax-free
5. Age 70½	From the day you reach 70½	Qualified charitable distributions allowed, up to $111,000 per person in 2026
6. RMDs	73 if born 1951–1959; 75 if born 1960 or later	First RMD by April 1 of the next year, then by December 31 each year; none for Roth IRA owners
7. Inheritance	After the owner dies	A spouse can treat it as their own; most other beneficiaries empty it within 10 years

The SECURE Act of December 2019 and the SECURE 2.0 Act signed December 29, 2022 rewrote many IRA rules in stages: no more age cap on contributions, RMDs pushed to 73 and then 75, the missed-RMD penalty cut from 50% to 25%, an indexed IRA catch-up, new exceptions to the early withdrawal tax, mandatory Roth catch-ups for higher-paid 401(k) participants, and a federal match for lower-income savers from 2027. The One, Big, Beautiful Bill of July 2025 didn't change IRA contribution or withdrawal rules, though it created Trump Accounts for children. Here's the timeline, with status as of November 8, 2026.

Description: Changes listed by the year they take effect, with current status in the last column.

Effective	What changed	Status
2020	No age cap on traditional IRA contributions; RMD age raised from 70½ to 72; 10-year rule for non-spouse heirs; $5,000 birth or adoption withdrawals without the 10% tax; taxable non-tuition fellowship and stipend payments count as compensation	In effect (SECURE Act)
From December 29, 2022	Terminal illness exception; earnings removed with a corrected excess contribution no longer face the 10% tax	In effect
2023	RMD age 73; missed-RMD tax of 25%, 10% if corrected in time; Roth SEP and SIMPLE IRAs; employer contributions can be designated Roth; qualified disaster distributions up to $22,000 per disaster; one-time QCD to a charitable gift annuity or remainder trust; filing Form 1040 starts the statute of limitations for the missed-RMD tax (3 years) and the excess contribution tax (6 years)	In effect
2024	IRA catch-up starts indexing; no lifetime RMDs from Roth 401(k)s; 529-to-Roth IRA rollovers ($35,000 lifetime); $1,000 emergency and domestic abuse victim withdrawals; higher SIMPLE limits, and employers can swap a SIMPLE for a safe harbor 401(k) mid-year; QCD limit starts indexing	In effect
2025	Ages 60–63 super catch-up in 401(k)s and similar plans; final RMD regulations (issued July 2024) apply, so heirs of owners who had begun RMDs take annual withdrawals during the 10 years	In effect
2026	First IRA catch-up increase, to $1,100; employees whose prior-year FICA wages exceeded $150,000 must make 401(k) catch-ups as Roth	In effect; the final Roth catch-up regulations (September 2025) generally apply from 2027, with reasonable good-faith compliance in 2026
2027	The Saver's Credit becomes the Saver's Match, a federal deposit into your retirement account (paid starting 2028 for 2027 contributions); the IRA Compliance Resolution System (Rev. Proc. 2026-33) takes effect May 1; Treasury launches TrumpIRA.gov January 1	Law is set; as of November 2026 the Saver's Match has only Notice 2026-48, with details still to come
2033	RMD age 75 (people born 1960 or later)	Law is set; July 2024 proposed regulations treat people born in 1959 as age 73
2027 contribution limits	Not yet announced as of November 8, 2026	Usually published by notice in November; we'll update this guide when it is

It comes down to your marginal tax rate now versus when you withdraw. If your rate is high now and likely lower in retirement, a traditional IRA (if deductible) usually wins. If your rate is low now, you're young, you expect higher income later, or you want to leave tax-free money to your children, a Roth usually wins. If you're not sure, use both, so retirement brings one pocket of taxable money and one of tax-free money.

Description: Your situation on the left, the account that usually fits better in the middle, and why on the right. These are general patterns; run your own numbers.

Your situation	Usually better	Why
Early career, modest income (12% or 22% bracket)	Roth	Tax is cheap now, and decades of growth come out tax-free
High income (32% or more), with income dropping sharply in retirement	Traditional (if deductible)	Deduct at a high rate now, pay at a lower rate later
Over the Roth limit, covered by a workplace plan, no deduction	Backdoor Roth	A nondeductible traditional IRA has little advantage; converting makes the growth tax-free
Planning to retire in a state with no income tax, or in China	Look harder at traditional	You deduct North Carolina's 3.99% now and may owe no state tax later; China is a separate question
Leaving money to children	Roth	Heirs can generally take an inherited Roth out tax-free within 10 years; an inherited traditional IRA is taxable, often in the heirs' peak earning years
Worried about large RMDs at 73 and higher Medicare premiums	Roth or earlier conversions	Roth IRA owners have no RMDs, so late-life income stays lower
Might need the money early	Roth	Contributions can come out at any time with no tax or penalty

• One limit covers both: For 2026, traditional and Roth contributions together can't exceed $7,500 a person. You can split them, for example $3,000 traditional and $4,500 Roth.
• When a traditional IRA isn't deductible: You can still contribute. It's a nondeductible contribution: the contribution comes out tax-free later and the growth is taxed, and you track the basis on Form 8606. Simply leaving money in a nondeductible traditional IRA is usually worse than converting it to a Roth.
• It isn't only about tax: A Roth means paying tax up front. For a family with tight cash flow, whether the tax saved by a traditional deduction actually gets saved matters too.

Anyone with earned income ("compensation") for the year can contribute, at any age and regardless of citizenship. For 2026 the combined traditional and Roth limit is $7,500 a person, plus $1,100 if you're 50 or older by December 31, for $8,600, and never more than your earned income. Contributions for 2026 are due April 15, 2027, and a filing extension doesn't move that date.

• What counts as compensation: Wages, salaries, bonuses and commissions; net self-employment income (after half of self-employment tax and your own self-employed retirement contributions); taxable alimony under pre-2019 divorce instruments; and nontaxable combat pay. It does not include rent, interest, dividends, capital gains, pensions and annuities, Social Security, or wages excluded under the foreign earned income exclusion (Publication 590-A).
• The deadline: You can make 2026 contributions from January 1, 2026 through April 15, 2027. For deposits between January 1 and April 15, tell the custodian it's for 2026. When the IRS postpones deadlines for a disaster area, the contribution deadline moves too.
• Form 5498: Your custodian sends Form 5498 by May 31, 2027, showing your 2026 contributions, conversions, rollovers and December 31 value. You don't attach it to your return, but check it against your records.
• One IRA or several: The limit is per person, not per account. Several IRAs at different firms still share one $7,500. There's no joint IRA; each spouse has their own.

On a joint return, a spouse with little or no income can contribute to their own IRA based on the couple's combined earned income (a spousal IRA): up to $7,500 each for 2026, plus $1,100 each at 50+. A child of any age with their own earned income can have a custodial Roth IRA, funded up to the lesser of $7,500 or the child's earnings, and the money can come from the parents.

Spousal IRAs

• The rule: You must file jointly. The two spouses' IRA contributions together can't exceed the earned income on the joint return. Example (hypothetical numbers, to show the method): one spouse earns $90,000 and the other stays home with no income; for 2026 each can contribute $7,500, or $15,000 in total, and if the at-home spouse is 52, $8,600.
• The account is theirs: The spouse without income opens the IRA in their own name, owns the money and names their own beneficiaries.
• Deductibility: If the spouse without income isn't covered by a workplace plan but the other spouse is, the joint MAGI range of $242,000–$252,000 applies; if neither is covered, the contribution is fully deductible.
• A nonresident spouse: If one spouse is a nonresident alien, you generally can't file jointly unless you elect to treat that spouse as a U.S. resident (§6013(g)), which puts their worldwide income on the U.S. return. Whether that's worth it takes a full calculation.

IRAs for kids

• What income counts: W-2 wages from a job, or self-employment income from tutoring, babysitting or mowing lawns (keep records; net earnings over $400 owe self-employment tax). Allowances, gifts and investment income don't count.
• Working in the family business: Pay must match real work, with records of hours and duties. Wages from an S or C corporation are subject to FICA; a parent's sole proprietorship (or a partnership owned only by the parents) generally doesn't owe FICA on wages to a child under 18 (see yclcpa.com/scorp).
• Who puts the money in: If your child earned $3,000, you can put $3,000 into their Roth IRA even if the child spent their paycheck. It's a gift to the child, and gifts up to $19,000 a year don't need a gift tax return.
• Why Roth is the usual choice: A child's income is usually within the standard deduction, so there's no income tax to deduct against; Roth growth is tax-free for decades, and contributions can come out if needed.
• Ownership: A minor's IRA is a custodial account, and control passes to the child at the age of majority under state law.
• How it differs from a Trump Account: A Trump Account doesn't need earned income, but withdrawals are taxed under traditional IRA rules (see yclcpa.com/trump).

Roth IRA eligibility is based on modified AGI: for 2026 it phases out from $153,000 to $168,000 for single filers, $242,000 to $252,000 for joint filers, and $0 to $10,000 for married filing separately. Anyone can contribute to a traditional IRA, but if you or your spouse are covered by a workplace plan, the deduction depends on income: for 2026, $81,000–$91,000 single, $129,000–$149,000 joint when the contributor is covered, and $242,000–$252,000 when only the other spouse is covered. If neither of you is covered, the deduction is full at any income.

• What "covered" means: If box 13 "Retirement plan" on your W-2 is checked, you were an active participant that year, even if the employer only put in a small amount.
• The separate-return trap: If you're married filing separately and lived with your spouse at any time during the year, the Roth range is $0–$10,000, which shuts most people out. If you lived apart all year, the single ranges apply.
• How MAGI is figured: Start from AGI, add back the foreign earned income exclusion and similar items, and for Roth purposes subtract income from Roth conversions. Publication 590-A has worksheets.
• If you got it wrong: If you find out after year-end that your income was too high for the Roth contribution you made, you can recharacterize it, with its earnings, as a traditional contribution by the filing deadline including extensions, and then consider converting (see the backdoor Roth and common mistakes sections).

Since 2024, money in a 529 plan open for at least 15 years can roll into the beneficiary's own Roth IRA, up to $35,000 over a lifetime, counting against that year's IRA limit. Lower-income savers who contribute to an IRA or 401(k) can claim the Saver's Credit for 2026; starting with 2027 contributions, it becomes a federal deposit into your retirement account (the Saver's Match) of up to $1,000, paid starting in 2028.

529-to-Roth IRA rollovers

• The conditions: The 529 account has been open at least 15 years; the money goes to a Roth IRA owned by the 529 beneficiary; it moves directly from the 529 to the Roth IRA; and contributions made in the last five years, plus their earnings, can't be moved.
• How much: Each year's rollover can't exceed that year's IRA limit ($7,500 for 2026, minus any other IRA contributions that year), with $35,000 over a lifetime. The beneficiary needs at least that much earned income, but the Roth income limits don't apply.
• Who it suits: Families whose child had a scholarship or didn't use all the college money. The IRS hasn't clearly said whether changing the beneficiary restarts the 15 years, so don't change beneficiaries just for this.

The Saver's Credit (2026)

• What it is: A nonrefundable credit of 50%, 20% or 10% (depending on income) of up to $2,000 a person of IRA, 401(k) and similar contributions, claimed on Form 8880.
• 2026 AGI limits: $80,500 joint, $60,375 head of household, $40,250 single and married filing separately; above those, nothing.
• Conditions: At least 18, not a full-time student, not someone else's dependent. Retirement withdrawals in the testing period reduce the eligible contributions.

The Saver's Match (from 2027)

• The law: SECURE 2.0 §103 replaces the Saver's Credit with a federal match starting with 2027: 50% of the first $2,000 of qualifying contributions, up to $1,000 a person, deposited into your retirement account rather than refunded.
• Status: The IRS issued Notice 2026-48 (IR-2026-89) on August 7, 2026 with its initial thinking, taking comments until October 5, 2026; under the notice, matches will be paid starting in 2028 based on 2027 contributions. As of November 2026, detailed rules haven't been issued. Treasury plans to launch TrumpIRA.gov on January 1, 2027 to list low-cost IRAs that accept Saver's Match deposits.
• Keep in mind: Under the statute, the match goes into a non-Roth account and is taxable when withdrawn. Income limits and how to claim it depend on the final rules.

For 2026 the employee deferral limit for 401(k), 403(b) and governmental 457(b) plans is $24,500, plus $8,000 at 50 or older, or $11,250 instead if you turn 60–63 during the year. Employee deferrals, employer contributions and after-tax contributions together are capped at $72,000, not counting catch-ups. Starting in 2026, if your prior-year FICA wages from that employer exceeded $150,000, your catch-up contributions must be Roth.

• The Roth catch-up rule: Under SECURE 2.0, employees whose prior-year FICA wages from the employer (W-2 box 3) exceeded the threshold can make 401(k), 403(b) and governmental 457(b) catch-ups only as Roth. For 2026 the test is 2025 wages above $150,000. The final regulations issued in September 2025 generally apply from 2027, and plans follow a reasonable, good-faith reading in 2026; if a plan offers no Roth option, higher-paid employees may not be able to make catch-ups at all. The rule doesn't apply to the $1,100 IRA catch-up or to SEP and SIMPLE IRAs.
• Self-employed and S corporation owners: SEP and Solo 401(k) contributions for sole proprietors and single-member LLCs are based on net self-employment earnings (after half of SE tax and the contribution itself), which makes the employer piece roughly 20% of net earnings; S corporation owners get 25% of W-2 wages. A SEP can be set up and funded by the filing deadline including extensions; a SIMPLE IRA generally must be set up by October 1.
• SEP coverage: For 2026, every employee who earns over $800 and meets the age and service tests must be included; you can't contribute only for yourself.

If it's just you (and your spouse) and you want to save the most, a Solo 401(k) usually wins. For the simplest setup with employer money only, a SEP-IRA. With employees, where you want them to save some of their own pay and keep employer cost predictable, a SIMPLE IRA. All three can be Roth (SEPs and SIMPLEs since 2023). Remember that SEPs and SIMPLEs are IRAs, so their year-end balances count in the backdoor Roth pro-rata calculation; a Solo 401(k) doesn't.

Description: The comparison points on the left and the three plans on the right. The example row is the rough limit for a 45-year-old sole proprietor with $100,000 of net earnings after half of SE tax (hypothetical numbers, to show the method).

	SEP-IRA	SIMPLE IRA	Solo 401(k)
Fits	Sole proprietors and small companies, employer money only	Businesses with 100 or fewer employees	No full-time employees (a spouse can participate)
Who funds it	Employer only	Employee deferrals plus a 3% match or 2% for everyone	Employee deferrals plus employer contributions
2026 limit	25% of compensation (about 20% of net earnings for sole proprietors), up to $72,000	$17,000 or $18,100 employee; plus $4,000 or $3,850 at 50+; $5,250 at 60–63	$24,500 employee plus 25% / 20% employer, $72,000 total; catch-ups on top
Example: age 45, $100,000 net	About $20,000	$17,000 plus a 3% match of about $3,000, about $20,000	$24,500 plus about $20,000, about $44,500
Roth option	Since 2023 (if the custodian offers it)	Since 2023 (if the custodian offers it)	Per the plan document; most allow it
Must employees be covered	Yes, eligible employees at the same percentage	Yes, by match or 2%	Any full-time employee rules out a Solo 401(k)
Deadlines	Set up and fund by the filing deadline including extensions	Generally set up by October 1; deferrals through payroll	Employee deferral elections generally by year-end; first-year relief for sole proprietors per the plan document and Pub 560
Annual filing	None	None	Form 5500-EZ once plan assets exceed $250,000 at year-end
Backdoor Roth effect	Balance counts in pro-rata	Balance counts in pro-rata	Doesn't count

The SIMPLE IRA 2-year rule

• For the first 2 years, only to another SIMPLE: Within 2 years of first participating in an employer's SIMPLE plan, money can move tax-free only to another SIMPLE IRA. Moving it to a regular IRA or 401(k), or converting it to a Roth, is a distribution, with a 25% (not 10%) additional tax before 59½.
• After 2 years: You can roll it to a traditional IRA or 401(k), or convert it to a Roth.
• One plan a year: An employer with a SIMPLE IRA generally can't maintain another plan that year; since SECURE 2.0 (plan years after 2023), an employer can replace a SIMPLE with a safe harbor 401(k) mid-year.

How self-employed "compensation" is figured

• Sole proprietors and single-member LLCs: Schedule C net profit minus half of self-employment tax, minus your own contribution. In practice, the employer piece is about 20% of net profit after half of SE tax. Pub 560 has the worksheets.
• S corporation owners: Only W-2 wages count, not K-1 distributions. Low wages mean low contributions (see yclcpa.com/scorp).
• Make the employee election in time: Solo 401(k) employee deferrals ($24,500) generally have to be elected during the year, while employer contributions can wait until the filing deadline. Self-employed owners should complete the deferral election by year-end under the plan's terms.

A backdoor Roth means that someone over the Roth income limit makes a nondeductible contribution to a traditional IRA and then converts it to a Roth IRA. The tax code limits Roth contributions by income, but not conversions. The catch is the pro-rata rule: every traditional, SEP and SIMPLE IRA you own is counted at its December 31 value for the year of the conversion, and if any of it is pre-tax money, part of the conversion becomes taxable.

Description: Work from top to bottom; the right column lists what to watch and keep.

Step	What to do	Watch / keep
1. Check for pre-tax IRAs	Look at every traditional, old rollover, SEP and SIMPLE IRA in your own name (not your spouse's)	If there are any, plan to get them to zero by December 31 of the conversion year (step 5)
2. Make a nondeductible traditional IRA contribution	$7,500 for 2026 ($8,600 at 50+), any time from January 1, 2026 to April 15, 2027	Don't claim a deduction
3. Convert to a Roth IRA	Usually once the money settles, at the same custodian	Any earnings while you wait are taxable on conversion
4. File Form 8606	Part I records the nondeductible basis; Part II figures the taxable part of the conversion	If the contribution year and conversion year differ, file for both years
5. Deal with pre-tax IRAs	If your 401(k) accepts roll-ins, move pre-tax IRA money into it by December 31 of the conversion year	A 401(k) can take only pre-tax amounts, not nondeductible basis
6. Repeat each year	You can do it every year	Make each year's 8606 match the custodian's 1099-R and 5498

• The pro-rata rule is per person: Only IRAs in your own name count. Your spouse's IRAs, your 401(k) and inherited IRAs don't. If one spouse has an old pre-tax IRA, the other can still do a clean backdoor.
• It's the December 31 balance that counts: Even if you converted in January, a pre-tax IRA still in your name on December 31 of that year drags in the pro-rata math. Moving pre-tax IRA money into a 401(k) has to be finished by the end of the conversion year.
• Two years of Form 8606: If you make a 2026 contribution in March 2027 and convert right away, the contribution goes on your 2026 Form 8606 (line 1) and the conversion on your 2027 Form 8606. Many people file only one, and the IRS then treats the whole conversion as taxable.
• The step-transaction worry: Some people worry that the IRS could treat "contribute, then convert right away" as a direct Roth contribution and assess the excess contribution tax. As of November 2026 we haven't seen the IRS publicly challenge backdoor Roths reported properly on Form 8606, and the conference report for the 2017 tax law, in explaining the rules, noted that people over the income limit can contribute to a traditional IRA and convert. That isn't statutory text or a formal IRS ruling, so the usual practice is to report the 8606 accurately; there's no need to wait a long time just so it looks different.

Example (hypothetical numbers, to show the method): a couple each does a $7,500 backdoor Roth, and one has a $50,000 old IRA

Mr. and Mrs. Wang are both 45, file jointly with MAGI of $300,000 (above the $252,000 Roth limit), and both have workplace 401(k)s, so traditional contributions aren't deductible either. In March 2026 each makes a $7,500 nondeductible traditional IRA contribution and converts it in full to a Roth a few days later. Mr. Wang has no other IRA. Mrs. Wang has a pre-tax rollover IRA from an old job worth $50,000 on December 31, 2026. To keep it simple, assume no earnings before the conversions.

• If nothing is done: $6,525 of Mrs. Wang's $7,500 conversion is ordinary income, plus North Carolina tax at 3.99%. The other $6,525 of basis isn't lost; it stays in her IRAs to be used pro rata on later withdrawals or conversions, but it has to be carried forward on Form 8606 every year.
• The fix: If her employer's 401(k) accepts roll-ins, she moves the $50,000 pre-tax IRA directly into the 401(k) before December 31, 2026. Her year-end IRA balance becomes $0 and the conversion is entirely tax-free. Ask the plan administrator first whether it accepts roll-ins, which forms it needs and how long it takes, and don't leave it until late December.
• If the 401(k) won't accept it: She could convert the $50,000 too (more tax this year, all tax-free later), or skip the backdoor for this year. Which is better depends on her tax rates now and later.

A mega backdoor Roth uses after-tax 401(k) contributions (not Roth contributions) and turns them into Roth money, either through an in-plan Roth conversion or an in-service withdrawal to a Roth IRA. The room is the 2026 total limit of $72,000 minus your own deferrals and employer contributions. It only works if the plan allows both after-tax contributions and in-plan conversions or in-service withdrawals, and many plans don't.

• How much room: Example (hypothetical numbers, to show the method): at 45, with $24,500 of deferrals and a $10,000 employer match, there's room for $72,000 − $24,500 − $10,000 = $37,500 of after-tax contributions in 2026. Catch-ups at 50+ don't count toward the $72,000.
• Two ways to convert: An in-plan Roth rollover moves after-tax money into the plan's Roth account; an in-service distribution moves it to a Roth IRA. The after-tax contributions themselves convert tax-free, but earnings on them are taxable, so most people convert soon after contributing.
• Splitting basis and earnings: Under Notice 2014-54, a single distribution can send the pre-tax part (including earnings on after-tax money) to a traditional IRA and the after-tax contributions to a Roth IRA, without mixing them pro rata.
• Limits for higher-paid employees: After-tax contributions must pass nondiscrimination testing (ACP). Where rank-and-file employees don't participate much, some of a higher-paid employee's after-tax contributions may be refunded.
• It doesn't conflict with a backdoor Roth: The mega backdoor happens inside the 401(k) and isn't affected by the IRA pro-rata rule. You can do both in the same year.

Anyone, at any income, can convert pre-tax money in a traditional, SEP or SIMPLE IRA (after the first 2 years) or a 401(k) to a Roth. The taxable part is ordinary income that year, with no 10% early withdrawal tax. Since 2018 a conversion can't be undone (no recharacterization), and before 59½ each conversion has its own five-year clock. A conversion must be done by December 31; there's no April 15 grace period.

• Convert in low-income years: The years after retiring and before Social Security and RMDs, a year between jobs or on leave, the early years of a business, or a year with large losses all mean lower rates and room to convert more.
• Fill up a bracket: Each year, estimate taxable income and convert only up to the top of your current bracket, for example the top of the 22% or 24% bracket, spreading conversions over several years instead of jumping into a higher bracket in one.
• Knock-on effects: A conversion raises AGI, which can make more Social Security taxable, raise Medicare premiums two years later (IRMAA), cut ACA premium credits, phase out the 2025–2028 $6,000 deduction for people 65 and older, and push you over the 3.8% net investment income tax threshold. Count all of them.
• State tax: North Carolina taxes conversion income at 3.99% for 2026. If you plan to move to a state with no income tax, converting after the move may save the state tax; if you moved here from a high-tax state, be clear about your residency in the year of the move.
• Pay the tax from outside the IRA: Paying conversion tax with non-IRA money is the most efficient. Tax withheld from the conversion counts as a distribution and, before 59½, also gets the 10% additional tax.
• Estimated tax: For a large conversion without withholding, make quarterly estimated payments or increase withholding at work before year-end to avoid an underpayment penalty (see yclcpa.com/1040es). Withholding from an IRA distribution is treated as paid evenly through the year by default, so a year-end withholding can also patch a shortfall.
• The five-year clock: Before 59½, the taxable part of each conversion has to stay in for five years (counted from January 1 of the conversion year) to avoid the 10% tax when withdrawn. After 59½, that clock no longer matters for the penalty.
• RMD years: Once RMDs begin, take that year's RMD first; the RMD itself can't be converted.

Example (hypothetical numbers, to show the method): a newly retired couple fills the 12% bracket

Mr. Lee is 63 and Mrs. Lee is 62. Both retired in 2026, neither has started Social Security, and they file jointly. Interest, dividends and a small annuity total $40,000, so after the 2026 joint standard deduction of $32,200, taxable income is only $7,800. Their traditional IRAs and 401(k)s hold $1,200,000, and their RMDs from 73 are expected to be large.

• If RMDs would later put them in the 22% or 24% bracket, every dollar converted now at about 12% is never taxed again, and Roth money has no RMDs.
• What else to weigh: Their Medicare premiums at 65 depend on income two years earlier (this year, at 63); if they buy ACA coverage, a conversion reduces premium credits; and smaller RMDs later can mean less of their Social Security is taxable.
• Rerun it every year: This shows the method. The right amount depends on each year's income, brackets, state tax and premium thresholds; there's no fixed number.

After leaving a job you usually have four choices for a 401(k): leave it in the old plan, move it to the new employer's plan, roll it to an IRA, or cash out. If you move it, use a direct (trustee-to-trustee) rollover with no withholding. If the check is paid to you (an indirect rollover), the plan must withhold 20%, and you have 60 days to deposit the full amount, including the 20%, or the shortfall is a distribution. If the 401(k) holds your employer's stock, check the net unrealized appreciation (NUA) rules first.

• Split the after-tax money: If your 401(k) has after-tax contributions, Notice 2014-54 lets you send the pre-tax part to a traditional IRA and the after-tax contributions straight to a Roth IRA, with no tax on that basis.
• NUA on company stock: If your 401(k) holds highly appreciated employer stock, you can take a lump-sum distribution of the entire account within one tax year after a triggering event such as separation, moving the shares in kind to a regular brokerage account. You pay ordinary income tax only on the shares' cost basis now, and the appreciation (the NUA) is taxed as long-term capital gain when you sell; the rest of the account rolls to an IRA as usual. Shares rolled into an IRA lose this treatment. It's usually not worth it when basis is high and appreciation small. Box 6 of Form 1099-R shows the NUA.
• Roth 401(k) into a Roth IRA: The Roth IRA's five-year clock governs, and years in the Roth 401(k) don't carry over. If you've never had a Roth IRA, open a small one early to start the clock (see "Roth five-year rules" below).
• The once-a-year limit: It applies only to IRA-to-IRA 60-day rollovers. A 401(k)-to-IRA rollover isn't limited.

Before 59½, the taxable part of a traditional IRA withdrawal is ordinary income plus, usually, a 10% additional tax (25% from a SIMPLE IRA in the first 2 years), figured or excepted on Form 5329. Exceptions include a $10,000 lifetime first home, higher education costs, medical costs above 7.5% of AGI, health insurance premiums while unemployed, disability, substantially equal periodic payments (72(t)), $5,000 per child for a birth or adoption, a $1,000 emergency withdrawal each year, domestic abuse victims, terminal illness and qualified disasters. Exceptions remove only the 10% tax, not the income tax.

• 401(k)s and IRAs aren't the same: Withdrawals from the 401(k) of the employer you leave at 55 or later (50 for certain public safety workers) avoid the 10% tax. That rule doesn't apply to IRAs. If you'll need money between 55 and 59½, don't rush to roll the 401(k) into an IRA.
• Roth IRA ordering: Roth withdrawals come out in order: regular contributions first (always tax- and penalty-free), then conversions (taxable part first, oldest conversion first), and earnings last. So the money you contributed to a Roth can come out any time without tax or penalty.
• A qualified Roth distribution: Two conditions: you're 59½ (or disabled, deceased, or using $10,000 for a first home), and it's been five years since January 1 of the year of your first contribution (or conversion) to any Roth IRA. If both are met, earnings are tax-free too; if not, earnings are taxable and may face the 10% tax before 59½.
• One 60-day rollover a year: Taking money out of an IRA and putting it back within 60 days (an indirect rollover) is allowed once per 12 months across all your IRAs. Direct trustee-to-trustee transfers, Roth conversions and 401(k)-to-IRA rollovers aren't limited. Use direct transfers whenever you can.
• Withholding: A nonperiodic IRA withdrawal has 10% federal withholding by default; you can choose a different rate or none on Form W-4R. A rollover-eligible 401(k) distribution paid to you has mandatory 20% withholding, which you must make up to roll over the full amount. U.S. citizens and residents with a home address outside the U.S. can't opt out of withholding.
• Reporting: Custodians send Form 1099-R in January; the code in box 7a tells the type (for example 1 for an early distribution, 2 for an exception, 7 for a normal distribution, G for a direct rollover). If you have nondeductible basis, Form 8606 figures the tax-free part.

There are three five-year rules that people mix up. First, the Roth IRA qualified-distribution clock: one per person, starting January 1 of the year of your first contribution or conversion to any Roth IRA, which decides whether earnings are tax-free. Second, a separate clock for each conversion, which decides only whether converted money withdrawn before 59½ gets the 10% tax. Third, a separate clock for each Roth 401(k) plan. Heirs inherit the owner's clock.

Description: Each row is one five-year rule: when it starts, what it controls and what happens if it isn't met.

Five-year rule	When it starts	What it controls	If not met
Roth IRA qualified distributions	January 1 of the tax year of your first contribution (or conversion) to any Roth IRA; one per person, and new Roth IRAs don't restart it	Whether earnings are tax-free (you also need 59½, disability, death or a first home)	Earnings are taxable and may face the 10% tax before 59½; contributions are unaffected
Each conversion	January 1 of the conversion's tax year; separate for each	Whether the taxable part of that conversion, withdrawn before 59½, gets the 10% tax	10% tax (penalty only, since the tax was paid at conversion); none after 59½
Roth 401(k)	The year of your first Roth contribution to that plan; separate for each plan	Whether Roth earnings withdrawn from the plan are tax-free	Earnings taxable; after a rollover to a Roth IRA, the Roth IRA's clock applies
Inherited Roth IRA	Continues the owner's start year	Whether the heir's withdrawals of earnings are tax-free	If the owner hadn't reached five years, earnings are tax-free only once they do; heirs owe no 10%

• Open a Roth IRA early: The qualified-distribution clock only has to be met once. Even a small first contribution, or your first backdoor, starts it. A 2026 contribution made by April 15, 2027 counts from January 1, 2026.
• Example (hypothetical numbers, to show the method): First Roth IRA contribution in March 2026: the five years end December 31, 2030, so from January 1, 2031 (if you're also 59½) earnings are tax-free. A conversion made in 2028 and withdrawn before 59½ avoids the 10% tax only from January 1, 2033.

Owners of traditional, SEP and SIMPLE IRAs must take a required minimum distribution each year starting the year they turn 73 (born 1951–1959) or 75 (born 1960 or later): the prior December 31 balance divided by the factor for their age in the Uniform Lifetime Table. The first RMD can wait until April 1 of the next year; after that, each one is due by December 31. Roth IRA owners never have RMDs, and Roth 401(k)s have none since 2024. A shortfall costs 25%, reduced to 10% if you take it and file within the correction window, and you can ask for a waiver for reasonable cause.

• The math: Example (hypothetical numbers, to show the method): born in 1953, you turn 73 in 2026; your IRA was worth $500,000 on December 31, 2025, and the Uniform Lifetime Table factor at 73 is 26.5, so the 2026 RMD is $500,000 ÷ 26.5 ≈ $18,868. If your spouse is your sole beneficiary and more than 10 years younger, the Joint Life table gives a smaller RMD.
• The cost of waiting until April 1: Delaying the first RMD means taking two in the next year, both taxed that year, which can push you into a higher bracket.
• IRAs can be combined: Figure each traditional IRA's RMD separately, but you can take the total from any one or more of them. 401(k)s can't be combined this way; each plan pays its own. 403(b)s can be combined with each other.
• The still-working exception for 401(k)s: If you still work for the employer and own less than 5%, that 401(k)'s RMDs can wait until you retire. This doesn't apply to IRAs.
• If you missed one: Take the shortfall as soon as possible and file Form 5329, Part IX. The correction window ends at the earliest of the IRS mailing a deficiency notice, the tax being assessed, or the last day of the second tax year after the year the tax applies. Correct within the window and the tax drops from 25% to 10%. With reasonable cause (a custodian error, illness), write "RC" and the amount on Form 5329 with an explanation to ask that the tax be waived entirely.
• QCDs (qualified charitable distributions): From 70½, you can have the IRA pay a qualified public charity directly, up to $111,000 per person in 2026. It's excluded from income and counts toward your RMD, which beats withdrawing and then donating, especially if you don't itemize. A one-time QCD to a charitable gift annuity or remainder trust can be up to $55,000 in 2026. Donor-advised funds and private foundations don't qualify, and deductible IRA contributions made after 70½ reduce the excludable amount. On 2026 Forms 1099-R, custodians may use code Y for a QCD but aren't required to, so you still note "QCD" next to line 4b of Form 1040.

It depends on who the beneficiary is. A spouse can treat the IRA as their own or keep it as a beneficiary. Most other individual beneficiaries, such as adult children, must empty the account by December 31 of the tenth year after the owner's death, and if the owner had already started RMDs, they must also take annual withdrawals in years 1 through 9. "Eligible designated beneficiaries" can stretch withdrawals over their own life expectancy. Beneficiaries never owe the 10% early withdrawal tax.

• Annual withdrawals are required from 2025: The final RMD regulations issued in July 2024 confirmed that heirs of owners who had begun RMDs must take annual withdrawals during the 10 years. The IRS waived the penalty for 2021–2024 shortfalls (most recently in Notice 2024-35), and from 2025 those withdrawals are required.
• The year-of-death RMD: If the owner hadn't taken the full RMD for the year of death, the beneficiary must take it by year-end.
• Inherited Roth IRAs: The 10-year rule applies, but no annual withdrawals (a Roth owner is treated as dying before RMDs began). If the owner's Roth had met five years, everything comes out tax-free, so heirs often wait until year 10 for more tax-free growth.
• Plan the 10 years: You don't have to take it all in year 10. Spreading an inherited traditional IRA over lower-income years, such as around retirement or before a child starts college, often saves tax.
• Direct transfers only: A non-spouse beneficiary can't use a 60-day rollover. The money must move directly into an inherited IRA titled in the deceased owner's name. Moving it into your own IRA, or taking it out and putting it back, becomes a full distribution.
• The beneficiary form matters most: An IRA passes by its beneficiary designation, not by your will. Update it after a divorce, remarriage, birth or a beneficiary's death. If it names your estate or no one, beneficiaries may be stuck with the 5-year rule and probate.

Trusts as beneficiaries and estate planning

• See-through trusts: A trust named as IRA beneficiary that meets the requirements (valid under state law, irrevocable at death, identifiable beneficiaries and so on) is "looked through" to its individual beneficiaries, who then get the 10-year rule or life expectancy treatment that fits them. If not, it's treated as a non-individual beneficiary and may get only 5 years. The 2024 final RMD regulations cover see-through trusts in detail.
• Conduit and accumulation trusts: A conduit trust passes IRA withdrawals out to the trust beneficiaries each year, and they pay the tax. An accumulation trust can keep the money, but trust brackets are very compressed: for 2026, taxable income above $16,000 is taxed at 37%, so the tax can be much higher.
• When a trust makes sense: A minor or special-needs beneficiary, a beneficiary who can't manage money, or a blended family that wants to protect children from a prior marriage. An attorney drafts the trust, and the tax design has to fit the IRA withdrawal rules (see yclcpa.com/trust).
• IRAs don't go into a living trust: An IRA can't be retitled to a trust; it passes directly by beneficiary designation, outside probate.
• Estate tax: The IRA balance is part of the owner's estate. For 2026 the estate tax exemption for U.S. citizens and residents is $15,000,000; for nonresident aliens it's only $60,000. Heirs of a traditional IRA also pay income tax on withdrawals, and where estate tax was paid on the same money, an income in respect of a decedent (IRD) deduction may be available.

An IRA can hold stocks, bonds, funds and deposits, and through a self-directed IRA even real estate or private investments, but the tax code sets hard limits: no life insurance; collectibles (art, antiques, most coins and metals, wine) are treated as distributions; no dealings with yourself, family members or other disqualified persons, or the entire IRA stops being an IRA as of January 1 of that year and is treated as fully distributed; and business income or debt-financed income inside an IRA can owe UBTI tax.

• Self-directed IRAs: The custodian only holds the assets; it doesn't judge whether your transactions are allowed, and you bear the consequences. Before buying rental property, investing in a friend's company or buying foreign assets, check for prohibited transactions.
• Foreign funds inside an IRA: Foreign funds held through an IRA generally don't require Form 8621 (see yclcpa.com/8621), but whether you can buy them, and how they're valued, depends on the custodian.

Under a divorce or separation instrument, moving part of one spouse's IRA directly into the other spouse's IRA (a transfer incident to divorce) isn't a distribution and isn't taxed; from then on the money belongs to, and is taxed to, the receiving spouse. Withdrawing the money first and then handing it over leaves the owner with the tax and possibly the penalty. In federal bankruptcy, IRAs you funded yourself are protected up to a combined $1,711,975 (the amount adjusted April 1, 2025), and money rolled over from a 401(k) generally doesn't count toward that cap; outside bankruptcy, protection depends on state law.

Divorce

• IRAs move by direct transfer: Under the decree or separation agreement (§408(d)(6)), the custodian moves the stated amount directly into an IRA in the former spouse's name. Don't withdraw it and pay it over yourself.
• 401(k)s need a QDRO: Employer plans require a qualified domestic relations order. A former spouse who takes cash from a plan under a QDRO avoids the 10% tax (this exception is for plans, not IRAs). So if the former spouse needs cash, splitting the 401(k) under a QDRO can work better than splitting an IRA.
• Nondeductible basis: Basis in the transferred IRA moves proportionally, and each spouse tracks it on their own Form 8606.
• Update beneficiaries after a divorce: A divorce doesn't automatically remove a former spouse as an IRA beneficiary; you have to change it.

Creditor protection (general information, not legal advice)

• Federal bankruptcy: Under §522 of the Bankruptcy Code, your own traditional and Roth IRA contributions are protected up to a combined cap that adjusts every three years: $1,711,975 from April 1, 2025. SEPs, SIMPLEs and money rolled over from employer plans generally don't count toward the cap.
• Inherited IRAs: In Clark v. Rameker (2014), the Supreme Court held that a non-spouse inherited IRA isn't protected "retirement funds" in bankruptcy. Some states protect them under state law.
• Outside bankruptcy: Whether an IRA is protected in ordinary lawsuits and collections depends on state law; North Carolina law generally protects IRAs. ERISA plans such as 401(k)s generally have federal anti-alienation protection. Courts and attorneys have the final word on this; on the tax side, we help you weigh rolling a 401(k) into an IRA.

Most IRA mistakes can be fixed if you catch them early and follow the IRS method: remove an excess contribution and its earnings by the filing deadline including extensions and there's no 6% tax; recharacterize an excess Roth contribution as traditional; take a missed RMD quickly and file Form 5329; file a missing Form 8606 on its own; and use self-certification for a late 60-day rollover. Left alone, the penalties keep adding up year after year.

• Statute of limitations: Since SECURE 2.0, filing your Form 1040 starts the clock for these taxes: generally 3 years for a missed RMD and 6 years for an excess contribution, without a separate Form 5329. That's no reason to leave a mistake unfixed.
• Custodian errors: Starting May 1, 2027, certain errors caused by service providers (such as a custodian not following your instructions) can be corrected through the IRS's IRA Compliance Resolution System (ICRS, Rev. Proc. 2026-33), with the request made by the custodian or by you.

IRAs don't care about citizenship; they care about U.S. taxable earned income. Green card holders, H-1B workers and F-1 students with U.S. wages can all contribute. A U.S. citizen abroad whose wages are excluded under the foreign earned income exclusion has no compensation for IRA purposes. Nonresidents who withdraw from an IRA generally face 30% U.S. withholding, and whether the U.S.–China treaty reduces it depends on the facts. For a covered expatriate giving up a green card or citizenship, an IRA is treated as fully distributed the day before expatriation.

New immigrants, H-1B workers and students

• Your first year in the U.S.: Once you're a tax resident with U.S. wages, you can contribute that year. You can also contribute in a dual-status year, based on your U.S. earned income.
• F-1 and J-1 students: Being exempt from FICA doesn't matter; the wages are taxable income, so they count. If you file Form 1040-NR as a nonresident, you can claim a traditional IRA deduction there. Married nonresidents generally must file separately, so the Roth range is $0–$10,000 unless you lived apart from your spouse all year.
• Income from China: Wages earned in China count as compensation for a U.S. tax resident, who reports worldwide income, but not for a nonresident, for whom it isn't U.S. taxable income.
• Funds inside an IRA: Foreign funds held through an IRA generally don't require Form 8621 (see yclcpa.com/8621). An IRA is a U.S. account, so no FBAR; and owners and beneficiaries of IRAs don't report foreign accounts held inside the IRA either (see yclcpa.com/fbar).

U.S. citizens and green card holders living abroad

• FEIE or IRA: If you claim the FEIE and exclude all your wages, you have no compensation to contribute that year. If you use the foreign tax credit (Form 1116) instead and keep the wages in income, you can contribute; for the Roth income test, MAGI adds back excluded income.
• Withholding: U.S. citizens and residents with a home address outside the U.S. can't opt out of withholding on IRA withdrawals.
• Custodian restrictions: Some brokerages restrict trading or new accounts for customers with foreign addresses, so ask before you change your address.

Nonresidents (including people who have moved back to China and are no longer U.S. tax residents)

• The U.S. side: IRA withdrawals by a nonresident are U.S.-source income, and custodians generally withhold 30% and issue Form 1042-S. To claim a treaty benefit, give the custodian Form W-8BEN.
• The U.S.–China treaty: Article 17(1) says pensions paid for past employment are taxable only in the country of residence; Article 17(2) covers social security. Whether an IRA withdrawal counts as a "pension" under paragraph 1 depends on where the money came from (money rolled over from a 401(k) is different from your own contributions), and custodians may or may not accept the claim, so there's real uncertainty and it needs case-by-case analysis. U.S. citizens and green card holders can't use the treaty to avoid U.S. tax because of the saving clause.
• The China side: If you've moved back to China, how IRA withdrawals are treated there depends on your Chinese residency and the six-year rule (see yclcpa.com/retirechina).
• RMDs still apply: Living abroad or changing status doesn't change the RMD or inheritance rules.

Giving up a green card or citizenship

• Covered expatriates: IRAs (including Roth IRAs, but not SEP or SIMPLE IRAs) are "specified tax-deferred accounts," treated as fully distributed the day before expatriation, with the taxable part included in the final year's income and no 10% tax. SEPs and SIMPLEs are treated as deferred compensation. Whether to draw down or convert in the years before expatriating should be weighed together with the mark-to-market tax (see yclcpa.com/exittax).

Leaving the U.S., or holding retirement money in China

• Run the conversion numbers before you leave: If you plan to live in China long term and may stop being a U.S. tax resident, compare converting to a Roth in low-rate U.S. years against withdrawing later, taking into account 30% U.S. withholding, the treaty and Chinese tax. Nonresidents can convert too, but the converted amount is U.S.-source income taxed under nonresident rules.
• Chinese pensions, private pension accounts and annuity insurance aren't IRAs: They can't be rolled into a U.S. IRA and don't get IRA tax deferral in the U.S.; they're analyzed as foreign pensions or foreign financial assets, which may mean FBAR and Form 8938 reporting.
• Funds in Chinese accounts still count: The "no Form 8621 inside an IRA" point applies only inside the IRA. Funds and wealth management products in Chinese bank or brokerage accounts are subject to the PFIC rules for U.S. tax residents (see yclcpa.com/8621).

Three forms have to agree every year: Form 5498 from the custodian records your contributions, conversions and year-end value (sent by May 31); Form 1099-R records withdrawals, conversions and rollovers (sent by January 31); and your own Form 8606 tracks nondeductible basis and figures the taxable part of conversions and withdrawals. When the numbers don't match, the IRS's systems may send a letter.

Form 5498 (sent to you by the custodian; not attached to your return)

• Box 1: Traditional IRA contributions (including prior-year contributions made January 1–April 15); box 10: Roth IRA contributions; boxes 8 and 9: SEP and SIMPLE contributions.
• Box 2: Rollovers in (including direct rollovers from a 401(k)); box 3: amounts converted to Roth; box 4: recharacterized contributions.
• Box 5: Fair market value on December 31, which is the "year-end value" for Form 8606 line 6 and the basis for next year's RMD.
• Box 11: Checked if an RMD is due next year; boxes 12a and 12b: the RMD date and amount (custodians may choose to fill them in).
• Boxes 13a–13c: Postponed or late contributions and late rollovers (disaster relief, military service or self-certification).

Form 1099-R (sent to you and the IRS)

• Box 1: Gross distribution; box 2a: taxable amount, often blank or equal to box 1 for IRAs with "Taxable amount not determined" checked, leaving you to figure it on Form 8606; box 4: federal tax withheld; box 7a: distribution code; box 7b: checked for an IRA, SEP or SIMPLE.
• Common codes: 1 early distribution before 59½; 2 early distribution with an exception (including 72(t) and Roth conversions); 7 normal distribution; 4 death; G direct rollover; J early Roth IRA distribution; Q qualified Roth distribution; N and R recharacterizations; P and 8 returned excess contributions; S SIMPLE IRA within the first 2 years; Y QCD (optional for 2026).
• The backdoor 1099-R: A conversion produces a 1099-R (usually code 2 or 7, and box 2a may show the full amount). Don't simply copy it as taxable income; Part II of Form 8606 figures the real taxable amount.

Form 8606 (you file it with Form 1040)

• Part I: Records this year's nondeductible traditional contributions (line 1) and prior-year basis (line 2), and figures the tax-free share of this year's withdrawals or conversions (lines 6–13, using the December 31 value).
• Part II: The taxable part of converting traditional, SEP or SIMPLE money to a Roth (lines 16–18).
• Part III: Nonqualified Roth IRA distributions, tested in order: contributions, then conversions, then earnings.
• When it's required: Any year with a nondeductible traditional contribution, a withdrawal from an IRA that has basis, a Roth conversion, or a nonqualified Roth IRA distribution. Each spouse files their own. You can file a missing 8606 for an earlier year on its own.
• Keep them forever: Line 14 is the basis carried to next year. Decades from now, that number decides how much of your withdrawals are tax-free. Keep every year's 8606 and 5498.

Most states with an income tax tax IRA withdrawals and Roth conversions, with different retirement income exclusions. North Carolina taxes IRA withdrawals and conversions at 3.99% for 2026, with no general retirement income exclusion, but doesn't tax Social Security. Federal law (4 U.S.C. §114) bars states from taxing nonresidents on IRA and pension income, so the state you live in when you withdraw is the one that taxes it.

• North Carolina's starting point: North Carolina starts from federal AGI, so a deductible traditional IRA contribution reduces NC income too, and a Roth conversion included in federal AGI is taxed by NC as well.
• Bailey-protected government retirement benefits: People who were vested in a qualifying state, local or federal government retirement system as of August 12, 1989 don't pay NC tax on those benefits. Under NCDOR's directive PD-03-1, rolling that money into an IRA loses the exemption, because IRAs aren't Bailey-qualified plans. Bailey retirees should think hard before rolling over.
• The year you move: Split the year at the move date; the state where you're a resident when you take a withdrawal or convert gets to tax it. If you're moving to a state with no income tax, large conversions and withdrawals after the move may save state tax, as long as you can show the move is real (home, driver's license, voter registration and so on).
• Working in North Carolina, then leaving: Once you've moved away, North Carolina can't tax withdrawals from a traditional IRA you funded while working here (4 U.S.C. §114).

In your 20s, open a Roth and get the full employer match. In your 30s and 40s, as income rises, use the income limits to choose traditional, Roth or backdoor. After 50, use catch-ups and start preparing for the conversion window after retirement. Your 60s are prime Roth conversion years. After 70, take RMDs on time, use QCDs and tidy up beneficiaries. At every age, check beneficiaries and your Form 8606 records once a year.

Description: Each row is an age range with the most important tasks on the right. It's a general order; adjust for your own income and family.

Age	Focus	Check every year
20s	Get the full 401(k) match; open a Roth IRA to start the five-year clock; check the Saver's Credit if income is low	Contributions don't exceed earned income; beneficiaries
30s–40s	Near the Roth limit, contribute to traditional early in the year and decide later; above it, do a backdoor after clearing pre-tax IRAs; consider a mega backdoor if the plan allows; with kids, look at 529s and kids' Roth IRAs	Each year's 8606; whether your year-end IRA balance is zero; what to do with a 401(k) when you change jobs
50s	$1,100 more in IRAs and $8,000 more in a 401(k); if last year's wages topped $150,000, catch-ups become Roth; the age-55 separation rule for 401(k) withdrawals; splits and beneficiaries in a divorce or remarriage	Whether you made catch-ups; the pro-rata rule
60–63	$11,250 401(k) catch-up; after retiring and before Social Security and RMDs, model Roth conversions each year; income at 63 affects Medicare premiums at 65	Estimated tax after conversions; state tax and moving plans
65–72	Decide when to claim Social Security; keep converting in stages; QCDs from 70½	IRMAA thresholds; the switch from ACA to Medicare
73 and up (75 if born 1960 or later)	Take RMDs by December 31 (the first can wait until April 1 of the next year); give through QCDs instead of cash; consolidate accounts and update beneficiaries; tell your family where the accounts and 8606s are	RMD amounts and 1099-Rs; QCD records

Start with your age, income, workplace plan coverage and any old pre-tax IRAs, then decide whether this is a year to contribute, convert or withdraw.

• Situation A: early career, under the Roth limit. Get the full 401(k) match first, then fund a Roth IRA, $7,500 for 2026. Top up the prior year's IRA by April 15 each year.
• Situation B: over the Roth limit. Check for pre-tax IRAs in your own name and move them into a 401(k) before year-end; then do a backdoor Roth every year and file both years' 8606s. If your plan allows after-tax contributions and in-service conversions, look at a mega backdoor too.
• Situation C: self-employed, with an LLC or S corporation. Compare a SEP and a Solo 401(k). If it's just you (and your spouse), a Solo 401(k) usually allows more and stays out of the IRA pro-rata math; an S corporation's limit is based on W-2 wages.
• Situation D: newly or nearly retired, a few years before RMDs. Model Roth conversions every year, converting in stages without jumping brackets or triggering Medicare surcharges, and plan estimated tax. If you'll need money between 55 and 59½, keep the 401(k) where it is for now.
• Situation E: over 73, inheriting an IRA, or planning to move to China or give up U.S. status. Take RMDs on time, and use QCDs if you give to charity; for an inherited IRA, confirm whether annual withdrawals are required; for cross-border moves, work out U.S. withholding, the treaty and your Chinese residency first.