How a Roth Ira Can Help Lower Taxes in Retirement

October 13, 2025

Looking for ways to keep more of your money in retirement? A Roth IRA could be one of the smartest tools in your financial toolkit. With its potential for tax-free growth and tax-free withdrawals (when certain rules are met), a Roth can offer both flexibility and long-term tax advantages for you—and even your heirs.

Before you start, it’s important to know that not everyone can contribute directly to a Roth IRA. The IRS sets income limits based on your modified adjusted gross income (MAGI). If your income is too high, you might still have an option through a Roth conversion—moving money from a traditional IRA or other retirement account into a Roth.

Let’s break down some of the biggest benefits:

1. Tax-free growth and withdrawals

Unlike a traditional IRA, Roth contributions are made with after-tax dollars. That means you don’t get a deduction upfront—but the trade-off can be worth it. Once your money is in a Roth, all future growth, earnings, and qualified withdrawals are completely tax-free. As long as you meet the IRS rules, you’ll never owe federal taxes on your Roth earnings again.

2. No required minimum distributions (RMDs)

Traditional IRAs and most employer retirement plans require you to start taking RMDs after a certain age, whether you need the income or not. Roth IRAs don’t have this requirement for the original owner. That means your money can stay invested as long as you want, continuing to grow tax-free—and potentially leaving more for your heirs.

3. A legacy for your heirs

A Roth IRA can also be a powerful estate planning tool. While inherited Roth IRAs are subject to RMDs, the distributions beneficiaries take are generally tax-free. This can help you pass on wealth more efficiently. Just make sure to talk with an estate planning professional before making Roth IRAs a key part of your legacy plan.

4. More control over your retirement taxes

Having a mix of both traditional and Roth accounts gives you flexibility in how you manage income during retirement. You could draw from a traditional IRA up to a certain tax bracket, then use your Roth IRA for additional income without increasing your taxable income. This strategy can help you smooth out your tax bill from year to year.

5. Potential to reduce surtaxes

Qualified Roth withdrawals don’t count toward your modified adjusted gross income (MAGI). That can help limit exposure to the 3.8% Net Investment Income Tax (NIIT) or other income-based surtaxes that apply to high earners. In contrast, withdrawals or RMDs from traditional IRAs and 401(k)s do increase MAGI—and could push you over key tax thresholds.

6. A hedge against future tax hikes

No one knows where tax rates will go in the years ahead. If you believe they’re more likely to rise than fall, paying taxes on your contributions now and enjoying tax-free withdrawals later can be a smart long-term move.

7. Easy access to your contributions

One lesser-known advantage of a Roth IRA: you can always withdraw your original contributions (not earnings) at any time, for any reason, with no taxes or penalties. That flexibility makes a Roth IRA more accessible than many realize—though you’ll want to be cautious about tapping retirement savings early.

8. No age limit on contributions

As long as you’re earning income—whether from a full-time job, self-employment, or contract work—you can keep contributing to a Roth IRA at any age. There’s no upper age cutoff, unlike traditional IRAs in the past.

9. Ideal for younger earners

If you’re early in your career, a Roth IRA can be especially powerful. Chances are your income and tax rate are lower today than they’ll be in the future. Contributing now means you’re paying taxes at today’s rate and locking in decades of tax-free growth.

What if you earn too much for a Roth IRA?

If your income exceeds the IRS limits, you can still take advantage of Roth benefits through a Roth conversion. This process involves moving money from a traditional IRA or 401(k) into a Roth IRA. You’ll owe taxes on the converted amount (excluding any after-tax contributions), but from that point forward, the money grows and can be withdrawn tax-free. Because the rules can get complicated, it’s wise to talk with a tax professional before converting.

Bottom line: A Roth IRA is about tax flexibility

Whether you’re just starting to save or planning for retirement, a Roth IRA can give you more control over your future tax situation. The ability to grow your savings tax-free—and withdraw them tax-free later—makes it a valuable complement to other types of retirement accounts.

Taking the time to see how a Roth fits into your long-term plan could pay off for decades to come.

Sources:

https://www.fidelity.com/learning-center/personal-finance/retirement/nine-reasons-roth

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.