By Anne Tergesen
August 28, 2026
Gen Z is the Roth generation.
The youngest savers are flocking to Roth individual retirement accounts, taking advice from their parents and social-media influencers touting the tax-free growth the accounts offer.
The details
Among Gen Z investors, total IRA contributions grew 65% year-to-year in the first quarter of 2026, compared with a 31% increase for millennials. Three-quarters of people age 35 and under chose Roths, compared with less than half in that age group a decade ago, according to Fidelity Investments.
Overall, IRA contributions for people of all ages hit record highs in the first quarter of this year, with nearly 30% more dollars flowing into these accounts than in the same period last year. The number of IRA owners making contributions also rose nearly 30%, according to data published Thursday by Fidelity, based on an analysis of 19.6 million IRA accounts.
Nearly seven out of every 10 dollars that went into a Fidelity IRA in the first three months of this year ended up in a Roth account. With these, owners contribute after-tax dollars that grow and can be withdrawn tax-free. In contrast, traditional retirement accounts often allow tax-deductible contributions, but withdrawals are taxed as ordinary income.
“There is definitely a Roth effect happening,” with the youngest investors leading the charge, said Rita Assaf, vice president of retirement offerings at Fidelity.
The government permits IRA contributions of as much as $7,500 this year, with people 50 and older able to kick in an extra $1,100.
The context
The advantages of Roths for the youngest investors are clear. They pay taxes on their retirement savings today, when many are in low tax brackets.
The Roth also can do double-duty as an emergency account because investors can withdraw contributions without tax consequences or early-distribution penalties. (Earnings, on the other hand, generally can’t come out tax- and penalty-free until age 59½.)
Younger investors are also more likely to qualify to make direct Roth contributions because only single filers with modified adjusted gross income below $153,000 and married couples earning less than $242,000 are eligible to make a full Roth IRA contribution this year.
Gen Z is also starting both IRAs and 401(k)s at younger ages than older generations did, putting them on track to surpass their elders in retirement savings.
Although many older Americans earn too much to contribute directly to a Roth IRA, they are finding ways to get money into these accounts.
Dollars converted from traditional accounts to Roth IRAs rose 41% in the first three months of this year, compared with the same period of 2025, driven mainly by older investors, said Assaf.
For many, the goal is to shift money into Roths to be able to take tax-free withdrawals in retirement to supplement taxable income without moving into a higher tax bracket or triggering costly Medicare premium surcharges.
Fidelity on Thursday also released data showing that total 401(k) savings rates—which include both employer and employee contributions—hit a record 14.4% in the first quarter. That is close to the 15% annual savings rate most financial advisers recommend.
The average 401(k) account balance was $141,000 as of March 31, versus $131,380 for IRAs.
This Wall Street Journal article was legally licensed by AdvisorStream.
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