Faith & Finance by Faith & Finance

March 19, 2026 Understanding Your IRA Options with Mark Biller

For decades, retirement income in America has often been described as a three-legged stool.

The first leg is Social Security, which historically provides roughly 35–45% of a retiree’s monthly income. The second leg used to be company pensions, but those have largely been replaced by employer-sponsored plans such as 401(k)s and 403(b)s, which now provide roughly 15–20% of retirement income on average.

The third leg—and the one individuals have the most control over—is personal savings. One of the most important tools for building those savings is the Individual Retirement Account, or IRA.

This is especially important for people who don’t have a strong employer retirement plan. In those cases, personal savings often need to carry even more of the load in retirement.

What an IRA Actually Is

Before diving into the different types of IRAs, it helps to understand one key point: an IRA itself isn’t an investment.

An IRA is simply a tax-advantaged account that holds investments. Inside an IRA, you can own many of the same assets you might hold elsewhere—stocks, bonds, mutual funds, CDs, and more.

The main benefit of an IRA is the tax treatment. Depending on the type you choose, your contributions or withdrawals may receive special tax advantages that can significantly affect your long-term financial plan.

Traditional vs. Roth: The Key Difference

When people talk about IRAs, they are usually referring to two primary types: the traditional IRA and the Roth IRA.

Traditional IRAs

Traditional IRAs have been around since 1974. Their main advantage is the immediate tax deduction many contributors receive.

When you contribute to a traditional IRA, you may be able to deduct that contribution from your taxable income. Your investments then grow tax-deferred, meaning you don’t pay taxes on the gains each year.

However, when you begin withdrawing money in retirement, those withdrawals are taxed as income.

In simple terms: Traditional IRA = tax break now, taxes later.

Roth IRAs

Roth IRAs were introduced in 1997, and they reverse the traditional model.

With a Roth IRA, contributions are not tax-deductible today. However, the major benefit comes later: qualified withdrawals in retirement—including investment gains—are completely tax-free.

In other words: Roth IRA = no tax break now, but no taxes later.

Which One Is Better?

The decision between traditional and Roth IRAs largely depends on your expected tax situation.

If you believe your tax rate will be higher in retirement, a Roth IRA can be very attractive because you pay taxes today at a lower rate and enjoy tax-free income later.

This is why Roth accounts are often recommended for younger workers who are early in their careers and likely in a lower tax bracket.

However, the decision can become more complicated for people who are within 10–15 years of retirement. At that stage, many people are in their peak earning years and higher tax brackets, which may make a traditional IRA more appealing.

Taxes aren’t the only factor, but they are often the most important one.

Contribution Limits You Should Know

Contribution limits for IRAs change periodically, and it’s important to stay current.

For 2026, the limits are:

$7,500 per person under age 50

$8,600 per person for those age 50 or older (thanks to catch-up contributions)

If you’re married filing jointly, each spouse can contribute to their own IRA, even if one spouse doesn’t have earned income—as long as the household’s earned income covers the total contributions.

One important note: there is no such thing as a joint IRA. Each account must belong to an individual.

IRA vs. 401(k): Which Should Come First?

Employer-sponsored retirement plans, such as 401(k)s, have significantly higher contribution limits.

In 2026, employees can contribute:

$24,500 annually

$32,500 if age 50 or older

But the biggest advantage of workplace plans is often employer matching. If your employer matches contributions, the general rule is simple: Always contribute enough to receive the full match first.

That match is essentially free money and should be viewed as part of your compensation.

After reaching the match threshold, you can evaluate whether to continue contributing to your 401(k) or begin funding an IRA—especially if the IRA offers better investment choices.

Income Limits and Eligibility

IRA eligibility can become more complicated depending on income levels and workplace plans.

For traditional IRAs, whether you can deduct your contribution depends on:

Whether you’re covered by a workplace retirement plan

Your modified adjusted gross income

For married couples with workplace coverage, deductibility typically phases out between $129,000 and $149,000 of income.

For Roth IRAs, workplace plans don’t matter, but income limits still apply. Married couples generally lose eligibility to contribute directly to a Roth once their income exceeds $252,000.

Because these rules can be complex, reviewing them carefully—or consulting a financial professional—is often wise.

What About Old 401(k)s?

Many people accumulate retirement accounts as they change jobs. If you’ve left a company, you typically have the option to roll an old 401(k) into an IRA.

The main advantages include:

Simplifying your accounts

Access to a wider range of investments

However, there is one important exception. If you leave an employer at age 55 or later, you may be able to withdraw from that company’s 401(k) penalty-free before age 59½. Rolling the funds into an IRA would eliminate that special flexibility.

When Does a Roth Conversion Make Sense?

One of the most powerful planning strategies is a Roth conversion, in which funds from a traditional IRA are moved into a Roth IRA.

When you convert, you pay taxes on the amount converted—but those funds can then grow tax-free going forward.

For many people, the ideal window for conversions is between retirement and age 73, when required minimum distributions (RMDs) begin.

During those years, income may be temporarily lower, allowing retirees to strategically convert portions of their IRA each year while staying in a manageable tax bracket.

Done carefully over time, this strategy can significantly reduce taxes later in retirement.

Stewarding Retirement with Wisdom

Ultimately, retirement planning isn’t only about maximizing returns—it’s about wisely stewarding what God has entrusted to us. Proverbs 21:5 reminds us, “The plans of the diligent lead surely to abundance.”

Thoughtful planning today—whether choosing the right IRA, managing taxes wisely, or simplifying your accounts—can create greater freedom later to live generously and faithfully.

On Today’s Program, Rob Answers Listener Questions:

I run a small pool cleaning business in Florida and am finally starting to grow. I want to manage the finances the right way, but I don’t have much experience with accounting tools like spreadsheets. What are some practical steps I can take to start properly tracking my business finances and cash flow?

I’ve recently realized that God owns everything—my money, my property, and even my business. That’s been a big shift for me, and I want to honor Him with all of it. Sometimes I even wonder if God approves of the small things I spend money on. How can I practically walk with God in this area and steward my finances in a way that honors Him?

Resources Mentioned:

Faithful Steward: FaithFi’s Quarterly Magazine (Become a FaithFi Partner)

Sound Mind Investing (SMI)

Making Sense of Your IRA Options (Article by Mark Biller and Matt Bell at Sound Mind Investing)

Our Ultimate Treasure: A 21-Day Journey to Faithful Stewardship by Rob West

Wisdom Over Wealth: 12 Lessons from Ecclesiastes on Money

Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety

Rich Toward God: A Study on the Parable of the Rich Fool

Find a Certified Kingdom Advisor (CKA)

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