A lot of people will tell you that a 401(k) is the best retirement savings plan out there. Many 401(k)s are eligible for employer matches, and they come with much higher annual contribution limits than IRAs.
But IRAs can be a powerful retirement savings tool in their own right. And if you manage yours wisely, you may end up with a nest egg you're very pleased with.
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Part of managing your IRA wisely, though, means avoiding certain mistakes savers tend to make. Here are three such blunders to try to steer clear of in 2026.
1. Missing out on higher contribution limits
IRAs may not always get the same attention 401(k) plans do. But it's not just 401(k)s that are eligible to have their contribution limits change from one year to the next.
In 2026, IRA contribution limits are increasing. So if you've been able to max out in recent years, you may want to pay attention to the 2026 limits.
Next year, savers under 50 will be able to contribute up to $7,500 to an IRA -- up from $7,000 in 2025. The catch-up contribution for IRA savers ages 50 and over is also increasing from $1,000 this year to $1,100 in the new year. So all told, people 50 and over will have a 2026 contribution limit of $8,600.
2. Failing to diversify your investments
One benefit of IRAs over 401(k)s is that they allow you to hold stocks individually. With a 401(k), you're generally limited to a mix of different funds that may or may not align with your investing preferences.
But if you're going to invest in different stocks within your IRA, make sure you're diversifying. You may be inclined to load up on stocks from the same one or two hot sectors. But if those sectors have a meltdown, you could be looking at serious losses in your account.
It's also important to make sure your IRA is invested in an age-appropriate manner. A stock-heavy IRA is generally not a problem (in fact, it's a good thing) if you're a good number of years away from retirement. But if you're planning to retire in, say, 2027 or 2028, then 2026 is probably a good time to start scaling back on stocks and branching out into more stable assets.
3. Forgoing a Roth IRA for the near-term tax savings
Many savers prefer to contribute to a traditional IRA over a Roth IRA for the immediate tax savings. With a traditional IRA, your contributions go in on a pre-tax basis, thereby shielding some immediate income from the IRS.
Roth IRAs are funded with after-tax dollars and therefore don't offer that same benefit. But if you're eligible to contribute to a Roth IRA (higher earners have restrictions), it pays to do so.
With a Roth IRA, your money gets to grow tax-free, and your withdrawals are yours to take tax-free in retirement. That's huge, considering that other retirement income sources of yours, like Social Security, may be taxable.
Also, unlike traditional IRAs, Roth IRAs do not force savers to take required minimum distributions during retirement. You may have a year or two when you don't need your retirement savings for income. With a traditional IRA, you have to start taking withdrawals (which become taxable income for you) at a certain point. With a Roth IRA, you can leave your money to sit and grow as long as you want to.
The decisions you make for your IRA could spell the difference between having enough retirement income or not. Take care to avoid these blunders so you don't end up derailing your retirement savings efforts.
