97% of Americans Qualify – IRS Just Gave You $118,976.24 Tax-Free (How to

Is your retirement savings in need of a boost? If so, you’re in luck. Roth IRA contribution limits will finally increase in 2023.

What exactly does that mean? Basically, you can increase your retirement nest egg even further.

But, let’s pump the brakes a little. You may be wondering, what are Roth IRAs? This is similar to a regular IRA but with some awesome tax benefits. With Roth IRAs, you can contribute after-tax money. As a result, your retirement income will be tax-free when you retire.

Another key difference? The withdrawal of Roth IRA contributions is penalty-free, but the withdrawal of Traditional IRA contributions before age 59 1/2 is subject to a 10% penalty. Furthermore, each type of IRA has different contribution limits and eligibility requirements.

But, wait, there’s more. The new contribution limits let you save more money every year without fear of Uncle Sam taking too much. So, if you’re already contributing to a Roth IRA, you could increase your contributions even further. In case you haven’t started, now is the ideal time for you to do so. By raising the retirement savings limits, you’ll be able to maximize your retirement savings even more.

No wonder I consider a Roth IRA the best retirement tool out there.

It’s time to pull out the calculators and crunch some numbers because Roth IRAs have a bright future ahead of them.

Roth IRA limits for 2023

This is the first time in over four years that Roth IRA limits have been increased. For 2023, Roth IRA contribution limits are as follows:

Individuals can contribute $6,500 to Roth IRAs in 2023. “Catch-up contributions” are also available to plan participants who are 50 and older.

The income cap on Roth IRA contributions, however, prevents everyone from contributing. In order to qualify, you must meet certain income guidelines. In some cases, a Roth IRA isn’t even available to people with high incomes.

Depending on your income bracket, Roth IRA contributions might be “phased out.” In other words, you cannot contribute the full amount to a Roth account.

Based on your tax filing status, here are the Roth IRA income limits and phase-outs.

Couples filing jointly:

• A couple with a modified adjusted gross income (MAGI) under $218,000 may contribute the full amount.
• Reduced contributions are available to couples with MAGIs between $218,000 and $227,999.
• It is not possible to contribute to a Roth IRA if your MAGI is more than $228,000.

Separate filings for married couples:

• A reduced contribution is available to couples with a MAGI under $10,000.
• Those with a MAGI of $10,000 or more cannot contribute to Roth IRAs.

Individuals filing a single tax return:

• Contributions can be made up to the full amount by single filers with a MAGI of under $138,000 per year.
• Contributions are reduced for individuals with MAGIs of $138,000 to $152,999.
• Roth IRAs are not available to individuals with an annual income of $153,000 or more.

To help you make the most of your Roth IRA contributions, here are some additional tips:

• Even if your employer offers a retirement plan, you can contribute to a Roth IRA.
• Roth IRA contributions can be withdrawn at any time without penalty. Any earnings you withdraw will, however, be subject to tax.
• Earnings from Roth IRAs are tax-free. If you withdraw the money in retirement, you will not be taxed.

I always advise that you consider speaking with a financial advisor if you’re considering contributing to a Roth IRA.

Roth IRA Benefits

I already mentioned this above. But, Roth IRAs are one of my favorite retirement tools. One of the reasons I am such an advocate is that it provides a wide range of benefits.

• Tax-free growth. Within a Roth IRA, your investment earnings and contributions are tax-free. If you withdraw money in retirement, you won’t owe any taxes on it.
• Tax-free withdrawals. Roth IRA contributions and earnings can be withdrawn tax-free and penalty-free if you meet certain requirements. A minimum of five years holding in the account is required, as well as being at least the age of 59 ½.
• There is no minimum distribution requirement. A Roth IRA does not have a required minimum distribution (RMD), unlike a traditional IRA. As a result, you won’t have to start taking withdrawals from your Roth IRA until you’re at least age 55.
• Flexibility. A Roth IRA allows you to withdraw your contributions at any time, without penalty or tax. In comparison to a traditional IRA, this gives you more flexibility.
• Portability. If you want to change financial institutions, you can transfer your Roth IRA to another custodian. With traditional IRAs, this is not always possible.

Other benefits of a Roth IRA:

• There may be additional tax credits available to you, including the Saver’s Credit.
• Despite exceeding the income limit, you may be eligible for a “backdoor Roth IRA” conversion.
• In the event of your death, your…