IRS Publication 590: IRA Contributions, Rollovers, and RMDs

IRS Publication 590 is the government’s two-part manual on Individual Retirement Arrangements: Publication 590-A covers contributions, and Publication 590-B covers distributions. Together they set the contribution ceilings, the income limits that decide who gets a tax break, the rules for moving money between accounts, and the penalties that apply when something goes wrong. For 2026, the combined contribution limit across all your Traditional and Roth IRAs is $7,500, or $8,600 if you are 50 or older.¹ The rest of what the publications control follows below.

Traditional and Roth: Where the Tax Break Lands

The two IRA types differ in when the tax benefit shows up. Traditional IRA contributions may be deductible in the year you make them, and every dollar you withdraw later is taxed as ordinary income.² Roth IRA contributions go in with money you have already paid tax on, and qualified withdrawals in retirement come out tax-free.³

Which one saves you more depends on your bracket now versus your bracket in retirement. Neither is universally better.

2026 Contribution Limits and Deadlines

The combined 2026 limit across all your Traditional and Roth IRAs is $7,500. If you are 50 or older at any point during the year, an extra $1,100 catch-up brings your ceiling to $8,600.⁴ Under SECURE 2.0, the catch-up amount is now indexed to inflation and may rise in future years.¹

You cannot contribute more than your taxable compensation for the year. If you earned $4,000, your cap is $4,000, regardless of the general limit. The deadline for a given tax year is the federal income tax filing due date, typically April 15 of the following year, not counting extensions.⁵

Spousal Contributions

If you file a joint return, a spouse with little or no earned income can still make a full IRA contribution as long as the working spouse has enough taxable compensation to cover both.⁴ Each spouse can contribute up to $7,500 (or $8,600 if 50 or older), but the couple’s combined contributions cannot exceed their joint taxable compensation.

Recharacterizing a Contribution

Put money in one type of IRA and later realize the other type would have been a better fit? You can recharacterize the contribution by having your custodian move it (plus any earnings) to the other type of IRA. The deadline is the tax filing due date including extensions. Recharacterization applies only to contributions; it cannot undo a Roth conversion.

Who Gets the Deduction, and Who Can Contribute to a Roth

Traditional IRA Deduction Phase-Outs

Anyone with earned income can contribute to a Traditional IRA, but whether the contribution is deductible depends on two things: whether you or your spouse is covered by a workplace retirement plan, and your Modified Adjusted Gross Income. If neither spouse is covered by an employer plan, the full contribution is deductible at any income.²

When you or your spouse is covered, the deduction phases out across an income range the IRS updates each year. Income within the range means a partial deduction; income above the top means no deduction at all, though you can still make a nondeductible contribution.

Roth IRA Income Limits

Roth eligibility has its own income limits, unrelated to workplace plan coverage. For 2026, single filers can make a full Roth contribution with a MAGI below $153,000; the contribution phases out between $153,000 and $168,000 and is eliminated at $168,000 or above. For married couples filing jointly, the phase-out runs from $242,000 to $252,000.⁴ Married individuals filing separately who lived with their spouse at any point during the year face a $0 to $10,000 phase-out.³

Nondeductible Contributions, Basis, and the Backdoor Roth

If your income is too high for a deductible Traditional IRA contribution, you can still contribute on a nondeductible basis. That contribution creates “basis” in your Traditional IRA, meaning money on which you have already paid tax. You track this basis by filing Form 8606 with your return for every year you make a nondeductible contribution or take a distribution from an IRA that contains basis.⁶ Skipping Form 8606 is a common mistake and can lead to paying tax twice on the same money.

The Pro-Rata Rule

When you withdraw or convert money from a Traditional IRA that holds both deductible and nondeductible contributions, you cannot pull out only the after-tax portion. The pro-rata rule treats every dollar coming out as a proportional mix of taxable and nontaxable money. The math looks at your total basis across all non-Roth IRAs divided by the total balance of all your non-Roth IRAs (including SEP and SIMPLE IRAs) as of December 31 of the distribution year. Form 8606 walks you through it.⁷

Backdoor Roth

High earners who exceed the Roth income limits often use what is informally called a backdoor Roth: contribute to a Traditional IRA on a nondeductible basis, then convert that balance to a Roth. No income limit blocks nondeductible Traditional contributions or Roth conversions, so any earner can fund a Roth this way.

The catch is the pro-rata rule. If you already hold a large Traditional IRA balance from deductible contributions or rollovers, most of the converted amount is taxable. The backdoor works cleanly only when your total non-Roth IRA balance is at or near zero before the conversion. Run the pro-rata calculation first.

Fixing an Excess Contribution

An excess contribution happens when you exceed the annual limit, contribute more than your earned income, or make a Roth contribution while over the income threshold. The penalty is a 6% excise tax on the excess for every year it stays in the account.⁸ That 6% keeps compounding until you fix it.

Before the tax filing deadline (including extensions) for the year the excess occurred, you have two clean fixes:

Withdraw the excess plus any attributable earnings. The earnings are taxable and subject to the 10% early withdrawal penalty if you are under 59½.
Apply the excess to the following year, if your limit for that year has room. You still owe the 6% tax for the year the excess existed.

Miss the deadline and you can still remove the excess itself, but the 6% tax applies for every year it stayed put. You calculate the penalty on Form 5329, filed with your annual return.⁹

Moving Money: Rollovers and Transfers

Trustee-to-Trustee Transfers

The cleanest way to move IRA money between institutions is a direct trustee-to-trustee transfer. The funds go straight from one custodian to another without passing through you. These are not treated as distributions, are not reported as taxable events, and have no frequency limit. If you are just switching brokerages, this is almost always the right method.

60-Day Rollovers and the One-Per-Year Rule

A 60-day rollover works differently. The custodian sends the money to you, and you have exactly 60 calendar days to deposit it into another IRA. Miss that window by a day and the entire amount is a taxable distribution, potentially with the 10% early withdrawal penalty on top.¹⁰

You are also limited to one 60-day rollover across all your IRAs within any rolling 365-day period. This one-per-year rule aggregates every Traditional, Roth, SEP, and SIMPLE IRA you own.¹⁰ The restriction does not apply to direct trustee-to-trustee transfers or to rollovers from an employer plan into an IRA.

If you miss the 60-day window for a legitimate reason, the IRS allows self-certification under Revenue Procedure 2020-46. You give the receiving institution a model letter explaining why the deadline was missed, and you must complete the rollover as soon as the obstacle clears, typically within 30 days.¹¹ Self-certification is not a formal IRS waiver; the IRS can still challenge it on audit.¹²

Rollovers From an Employer Plan

Money from a 401(k) or similar plan can be rolled into a Traditional IRA and keep its tax-deferred status. Designated Roth balances must go into a Roth IRA to remain tax-free. When an employer plan distribution is paid to you rather than transferred directly, the plan administrator must withhold 20% for federal income tax.¹³ To complete the rollover in full, you have to replace that 20% from other funds and reclaim it as a credit when you file.

The Early Withdrawal Penalty and Its Exceptions

Distributions from a Traditional IRA before age 59½ are taxed as ordinary income and hit with a 10% additional tax, the early withdrawal penalty. The penalty applies to the taxable portion of the distribution and is calculated on Form 5329.⁸ For Roth IRAs, the penalty can apply to earnings withdrawn before age 59½ or before the five-year holding period has been met.

Publication 590-B lists several exceptions that let you take money out before 59½ without the 10% penalty:¹⁴

Unreimbursed medical expenses exceeding 7.5% of your adjusted gross income.
Qualified higher education expenses for you, your spouse, your children, or grandchildren.
First-time home purchase, up to a $10,000 lifetime limit.
Substantially equal periodic payments (SEPP), which must continue for at least five years or until you reach 59½, whichever is later.
Total and permanent disability, or death of the account owner.
Health insurance premiums while unemployed for at least 12 consecutive weeks.
Distributions taken to satisfy a federal tax levy.

SECURE 2.0 added more:

Emergency personal expenses. You can self-certify an unforeseeable financial emergency and withdraw up to $1,000 per year penalty-free. If you do not repay within three years, you cannot take another emergency withdrawal until the repayment is made or new contributions cover it.
Domestic abuse survivor distributions. A self-certifying victim of domestic abuse can withdraw the lesser of $10,000 (indexed for inflation) or 50% of the account balance without the 10% penalty. Repayment within three years is optional.
Federally declared disaster distributions. Up to $22,000 can be taken penalty-free within 180 days of a qualifying disaster, with the option to spread the income over three tax years or repay it.

All of these remain subject to ordinary income tax; only the 10% penalty is waived.

How Roth Distributions Are Ordered

Roth IRAs follow a specific order that determines which dollars come out first and what tax attaches. This ordering is why most Roth withdrawals are tax-free and penalty-free even before age 59½.

Regular contributions come out first. They are tax-free and penalty-free at any time, any age, for any reason. You already paid tax on that money.
Converted amounts come out next, first in, first out. The converted principal is generally tax-free because you paid tax at conversion, but withdrawing converted amounts within five years of that specific conversion can trigger the 10% penalty if you are under 59½.
Earnings come out last. They are subject to income tax and the 10% penalty unless the distribution is “qualified.”

A qualified Roth distribution requires two things: you must be at least 59½ (or disabled, or the distribution is to a beneficiary after death), and the account must have been open for at least five tax years dating from your first Roth IRA contribution.³ The five-year clock starts on January 1 of the tax year of your first Roth contribution and never resets, even if you open new Roth accounts later.¹⁵

Required Minimum Distributions

Traditional IRA owners (including SEP and SIMPLE IRAs) must begin taking Required Minimum Distributions at age 73. This age applies to anyone who turned 72 after December 31, 2022, under SECURE 2.0. The age moves to 75 for individuals who turn 74 after December 31, 2032.¹⁶ Roth IRAs are exempt from RMDs during the original owner’s lifetime.

Miss an RMD and the penalty is a 25% excise tax on the shortfall. Correct it within the two-year correction window by withdrawing the missed amount and filing an updated return, and the penalty drops to 10%.¹⁷ That is down from the 50% penalty that applied before SECURE 2.0, but 25% of a large RMD still hurts.

Calculating the RMD

The math is straightforward. Take the fair market value of each Traditional IRA as of December 31 of the previous year and divide by the life expectancy factor from the appropriate IRS table. You calculate the RMD separately for each Traditional IRA but can withdraw the total from any one or any combination.

Most owners use the Uniform Lifetime Table. The exception is if your sole beneficiary is a spouse more than 10 years younger, in which case the Joint Life and Last Survivor Table applies, giving a larger divisor and a smaller annual distribution.

A Qualified Longevity Annuity Contract lets you shift up to $210,000 of your IRA balance for 2026 into a deferred annuity that begins payouts later (typically at 80 or 85). The QLAC amount is excluded from the balance used to calculate your annual RMD.¹⁸

Inherited IRAs and the 10-Year Rule

When someone inherits an IRA from an owner who died in 2020 or later, the distribution rules depend on whether the beneficiary counts as an “eligible designated beneficiary.” Most non-spouse beneficiaries do not, and they must empty the entire inherited IRA by December 31 of the year containing the 10th anniversary of the owner’s death.¹⁹

Whether annual distributions are required during that 10-year window depends on the original owner’s RMD status. If the owner died before their required beginning date, the beneficiary can wait and take the entire balance in year 10. If the owner died after starting RMDs, the beneficiary must take annual distributions each year based on the Single Life Expectancy Table and then drain whatever remains by the 10-year deadline.

Eligible designated beneficiaries get more flexibility. This group includes the surviving spouse, the owner’s minor child (until the child reaches the age of majority), individuals who are disabled or chronically ill, and beneficiaries not more than 10 years younger than the original owner.¹⁹ They can stretch distributions over their own life expectancy rather than being forced into the 10-year window. Inherited Roth IRAs follow the same distribution timeline, though contributions and earnings that satisfy the five-year rule still come out tax-free.

The Reporting Forms That Track Your IRA

Several IRS forms track what goes into and comes out of your IRAs. Knowing what each reports helps you catch errors early and file an accurate return.

Form 5498 (IRA Contribution Information). Your custodian files this to report contributions for the tax year and the December 31 fair market value of the account. Because contributions can be made up to the April filing deadline, custodians have until the end of May to send it. The December 31 value on this form is what you use to calculate the following year’s RMD.²⁰
Form 1099-R (Distributions From Pensions, Annuities, Retirement Plans, etc.). Issued whenever money leaves your IRA, this form shows the gross distribution, the taxable amount, and any federal tax withheld. Box 7 carries a distribution code identifying the transaction type, such as Code 1 for an early distribution or Code G for a direct rollover.²¹
Form 8606 (Nondeductible IRAs). You file this yourself whenever you make a nondeductible Traditional IRA contribution, take a distribution from a Traditional IRA that contains basis, or convert Traditional IRA money to a Roth. It calculates the pro-rata split between taxable and nontaxable portions.⁶
Form 5329 (Additional Taxes on Qualified Plans). Filed when you owe the 6% excess contribution penalty, the 10% early withdrawal penalty, or the 25% missed-RMD penalty. It attaches to your Form 1040.⁸

Form 8606 is the one most often overlooked. If you have ever made a nondeductible Traditional IRA contribution and never filed it, go back and file it for the missed years. Without that record, the IRS has no evidence of your basis, and you risk paying income tax on money that was already taxed once on the way in.

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026; IRA Limit Increases to $7,500
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Internal Revenue Service. IRA Deduction Limits
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Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
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Internal Revenue Service. Instructions for Form 5329
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