If you're saving for retirement, you've probably heard the same advice over and over:

“Put money into your 401(k).”

Then someone tells you:

“You should max out your Roth IRA.”

Then another person says:

“Don't forget your SEP IRA.”

And if you work for a government or nonprofit organization, you may also have a 457(b) plan.

So which one should you fund first?

And perhaps the bigger question:

Can you actually use your Roth IRA before age 59½?

The answer may surprise you.

A Roth IRA can be one of the most valuable retirement accounts available because qualified withdrawals can be tax-free. But it also has some flexibility that many people don't fully understand.

At Mundo Financial Services, we believe retirement planning isn't about blindly putting the maximum amount into one account. It's about understanding how your different accounts work together and building a retirement strategy around your goals.

Let's break it down.

Can I Take Money Out of a Roth IRA Before 59½?

Yes—but there is an important distinction between your contributions and your investment earnings.

Generally, Roth IRA distributions follow ordering rules under which your regular contributions come out first.

For example, let's say you're 45 years old and your Roth IRA is worth $150,000.

You've contributed $90,000 over the years and your investments have generated $60,000 of growth.

Generally, the first $90,000 distributed is treated as your contributions.

That doesn't mean you should start treating your Roth IRA like a savings account. The whole point is to allow the money to potentially compound for years or decades.

But it does mean your Roth IRA isn't necessarily “locked up” until age 59½.

The rules become more complicated when you're withdrawing investment earnings. To receive earnings tax-free as a qualified distribution, you generally must satisfy the applicable Roth IRA requirements, including the five-year rule and the age requirement, unless another exception applies.

There are also exceptions to the 10% early-distribution penalty for certain situations.

Bottom line: Don't assume that every dollar in a Roth IRA is inaccessible before 59½—but don't assume every dollar can come out tax-free either.

Roth IRA Contribution Limit for 2026

For 2026, the IRA contribution limit is:

$7,500 if you're under age 50

If you're age 50 or older, the additional catch-up contribution brings the total to:

$8,600

The $7,500 limit applies to your combined Traditional IRA and Roth IRA contributions.

For example, you can't contribute $7,500 to a Roth IRA and another $7,500 to a Traditional IRA and claim $15,000 of regular IRA contributions.

There are also income restrictions on making a direct Roth IRA contribution.

For 2026, the Roth IRA contribution phase-out ranges are:

• Single/head of household: $153,000–$168,000
• Married filing jointly: $242,000–$252,000

If your income is above the applicable range, you may not be eligible to make a direct Roth IRA contribution.

That's one reason it's important to look at your entire financial situation rather than simply assuming you can contribute the maximum.

IRS retirement contribution limits

Should I Max Out My 401(k) or Roth IRA First?

This is one of the most common questions we hear.

The honest answer is:

It depends.

There isn't one universal order that works for every investor.

However, there is a framework that can make sense for many people.

Step 1: Get Your Full Employer Match

If your employer offers a 401(k) match, start there.

If your employer matches part of your contribution, you generally want to contribute enough to receive the full match.

Why?

Because you're leaving part of your compensation on the table if you don't.

Step 2: Consider Maxing Out Your Roth IRA

If you're eligible, a Roth IRA can be an attractive next step because qualified withdrawals can be tax-free.

You're essentially creating another tax bucket for retirement.

Step 3: Increase Your 401(k) Contributions

Once you've captured the employer match and considered your Roth IRA, you can look at increasing your 401(k) contributions.

For 2026, the employee contribution limit for a 401(k) is $24,500, before applicable catch-up contributions.

IRS 401(k) contribution limits

What About a SEP IRA?

If you're self-employed or own a business, a SEP IRA can be a completely different animal.

SEP IRAs are primarily funded by employer contributions and can allow significantly larger contributions than a traditional or Roth IRA.

For 2026, the SEP IRA contribution limit is generally the lesser of 25% of compensation or $72,000, subject to the applicable rules.

That can make a SEP IRA particularly attractive for business owners with substantial self-employment income.

But there is an important consideration:

A SEP IRA is generally a pre-tax account, while a Roth IRA is designed around after-tax contributions and potentially tax-free qualified withdrawals.

That difference can be extremely important when you're planning for retirement.

What About a 457(b) Plan?

If you're eligible for a 457(b) plan, don't overlook it.

457(b) plans are commonly available to certain government and nonprofit employees.

For 2026, the basic elective deferral limit is $24,500, subject to the rules of your specific plan.

And here's where retirement planning gets interesting:

Depending on your circumstances, you may be able to contribute to more than one type of retirement plan during the same year.

However, the contribution limits and coordination rules can be complicated, particularly when you participate in multiple employer-sponsored plans.

Don't assume that having a 401(k) and a 457(b) automatically means you can simply double every limit without checking the specific rules.

Can I Split My Retirement Contributions Between Accounts?

Absolutely.

You don't necessarily have to pick one account and put everything there.

For example, an investor might choose:

401(k): $15,000
Roth IRA: $7,500
Taxable investment account: $5,000

Another investor might choose:

401(k): $24,500
Roth IRA: $7,500

And someone who owns a business could have a completely different strategy involving a SEP IRA.

The right combination depends on:

• Your income
• Your tax bracket
• Employer matching
• Whether you're self-employed
• Your retirement age
• Your current savings
• Your expected retirement income
• Your need for money before retirement
• Your tax expectations for the future

That's why simply asking “Which account is best?” isn't always the right question.

Your Roth IRA Strategy in Your 20s

Age 20–30: Start Early

If you're in your 20s, your biggest advantage is time.

You may not have a huge income yet.

That's okay.

The goal is to build the habit of saving and investing.

If you can contribute the full $7,500 to a Roth IRA in 2026, that's great.

If you can't, don't let that stop you.

Start with $500.

Then $1,000.

Then increase it as your income grows.

Your future self will appreciate the fact that you started.

A potential priority:

401(k) match → Roth IRA → additional 401(k) savings

And remember, this isn't a one-time decision.

You can increase your savings rate as your income increases.

Your Roth IRA Strategy in Your 30s

Age 30–40: Increase Your Savings Rate

Your 30s are often when your income begins to rise significantly.

This is also when lifestyle inflation can become a problem.

You get a raise—and somehow your expenses increase by exactly the same amount.

Instead, consider directing a portion of every raise toward retirement.

For example:

You receive a $10,000 raise.

You don't have to spend the entire $10,000.

You could increase your retirement contributions and still enjoy some of the raise.

This is also a good time to look at tax diversification.

You may want some money in:

• Traditional 401(k)
• Roth IRA
• Roth 401(k)
• Taxable investment accounts
• SEP IRA, if you're self-employed

The goal is to build flexibility.

Your Roth IRA Strategy in Your 40s

Age 40–50: Get Serious About the Numbers

Your 40s are often when retirement planning becomes much more real.

You may have a higher income.

You may have children heading toward college.

You may have a mortgage.

You may have a business.

And retirement may suddenly seem much closer than it did at 25.

This is the time to stop guessing and start calculating.

Ask:

How much have I saved?

How much am I saving each year?

When do I want to retire?

How much income will I need?

How much will come from Social Security?

How much will come from retirement accounts?

How much is in pre-tax accounts versus Roth accounts?

That last question matters.

Why Tax Diversification Matters

Let's say two people each retire with $2 million.

Investor A has:

$2 million in Traditional retirement accounts

Investor B has:

$1 million Traditional
$500,000 Roth
$500,000 taxable investments

They both have $2 million.

But they don't necessarily have the same tax situation.

Investor A has potentially more taxable income when money comes out of the Traditional accounts.

Investor B has more flexibility in deciding which accounts to draw from.

That's the concept of tax diversification.

It's not necessarily about paying the least tax today.

It's about creating flexibility for tomorrow.

What Happens Between 50 and 59½?

This can be a very important planning period.

You're getting closer to retirement, but you're not yet 59½.

You may also be eligible for additional catch-up contributions to employer retirement plans.

For 2026, the standard 401(k) catch-up contribution for someone age 50 or older is $8,000, bringing the general contribution opportunity to $32,500.

There are additional rules for ages 60–63 under SECURE 2.0.

This can be an excellent time to aggressively increase retirement savings if your cash flow allows.

But don't forget about your Roth IRA.

The Roth may become an important part of your overall retirement income strategy.

The Biggest Roth IRA Mistake?

We believe one of the biggest mistakes isn't contributing too much.

It's not contributing at all because you think retirement is too far away.

If you're 25, retirement might seem like it's a lifetime away.

That's exactly why starting can be so powerful.

If you're 35, you still have decades.

If you're 45, you still have time—but your savings rate becomes more important.

If you're 55, you're getting much closer, and the conversation changes from simply accumulating money to planning how that money will eventually create income.

Roth IRA vs. 401(k): Which One Is Better?

Instead of asking which one is better, ask:

What job does each account perform in my overall plan?

A traditional 401(k) may provide tax benefits today.

A Roth IRA can provide tax-free qualified withdrawals later.

A SEP IRA can provide significant retirement savings opportunities for business owners.

A 457(b) can provide another valuable retirement savings vehicle for eligible employees.

A taxable investment account provides flexibility and accessibility that retirement accounts may not.

You don't necessarily have to choose just one.

Your financial plan can use several.

Retirement Planning Isn't About One Account

At Mundo Financial Services, we believe retirement planning should be bigger than simply asking:

“How much can I put into my 401(k)?”

We want to look at the entire picture.

Your investments.

Your retirement income.

Your taxes.

Your Social Security.

Your business.

Your insurance.

Your estate plan.

And most importantly, when and how you want to use your money.

Because retirement isn't just about having a large account balance.

It's about having the right money in the right accounts at the right time.

Ready to Build Your Retirement Strategy?

Whether you're 25 and opening your first Roth IRA, 35 and trying to increase your savings, or 50 and wondering if you're on track to retire, the strategy should evolve with you.

If you're in Lakewood Ranch, Sarasota, Bradenton, or the surrounding Florida area, Mundo Financial Services can help you look at your retirement accounts as one complete picture rather than a collection of separate accounts.

Don't just ask, “Am I saving enough?”

Ask:

“Am I saving in the right places?”

“Am I creating tax diversification?”

“Will I have access to money when I want to retire?”

“And how will I turn my savings into retirement income?”

Those are the questions that can make a difference.

Frequently Asked Questions About Roth IRAs

Can I withdraw Roth IRA contributions before age 59½?

Generally, yes. Your regular Roth IRA contributions can generally be withdrawn at any time without income tax or the 10% early-distribution penalty. Earnings have different rules.

How much can I contribute to a Roth IRA in 2026?

The 2026 IRA contribution limit is $7,500 if you're under 50 and $8,600 if you're 50 or older, assuming you otherwise qualify.

Can I contribute to both a 401(k) and Roth IRA?

Yes, in many situations. The contribution limits are separate, although Roth IRA income eligibility rules still apply.

Can I contribute to a SEP IRA and Roth IRA?

Potentially, yes. SEP IRA and Roth IRA contributions are subject to different rules and limits.

Should I max out my 401(k) before my Roth IRA?

Not necessarily. For many investors, getting the full employer match first and then considering a Roth IRA is a reasonable starting point. Your income, tax bracket and retirement goals should determine the final strategy.

Do I have to wait until 59½ to use my Roth IRA?

No. Roth IRA contributions have different withdrawal rules from investment earnings. Qualified distributions of earnings generally require meeting the applicable age and five-year requirements, although exceptions exist.

Mundo Financial Services
Lakewood Ranch, Florida

This article is for educational purposes only and is not individualized investment, tax or legal advice. Retirement plan rules, contribution limits, income limitations and tax laws can change. Consult with your financial, tax and legal professionals before making retirement decisions.