A Roth IRA can provide tax advantages as you save for retirement and is an account to which you contribute after tax dollars. There is no tax-benefit for the current tax year, but your contributions and earnings grow tax-free. After you reach the age of 59 ½ and your account has been open for a minimum of five years any withdrawals made are penalty-free. There are exceptions for withdrawals with no penalty prior to the age of 59 ½, but you will want to consult a CPA for these exceptions.
Are you eligible to contribute to a Roth IRA?
There is no age limit to open a Roth IRA, but there are income and contribution limits:
Annual Roth IRA contribution limits in 2023 are the same as traditional IRAs. You can contribute $6,500 a year if you’re under 50, or $7,500 if you’re 50 or older.
To contribute to a Roth IRA, single tax filers must have a modified adjusted gross income (MAGI) of less than $153,000 in 2023.
If married and filing jointly, your joint MAGI must be under $228,000 in 2023.
Benefits of a Roth IRA
No age restrictions for contributions — You may contribute to a Roth IRA as long as you have qualifying earned income. For 2023, here are the maximum annual contribution limits:
- $6,500 if you are under the age of 50
- $7,500 if you are age 50 or older
Earnings grow tax-free — Your investment will have the potential to grow tax free with compound interest until you make a withdrawal.
Tax-free withdrawals — Withdrawals will be tax-free and penalty free if you are age 59 ½ or older and you have had the account open for a minimum of five years.
No required minimum distributions — Unlike a traditional IRA, you are not required to a take a required minimum distribution at the age of 73.
No income taxes paid for beneficiaries — Your beneficiaries will not pay income tax on any withdrawals.
Schedule a Meeting to Learn About Roth IRA Accounts
If you are looking to create income for your retirement years, contact Safe Harbor to learn more. We offer a complimentary consultation to review your existing retirement plans and can provide guidance on the right IRA Account solution that will provide the money you need to live comfortably in your golden years. Contact us here or call at 614-760-0670 to schedule your initial consultation or to learn more about Roth IRA accounts.