Youve probably heard by now that Roth IRAs have magical money-growing powers.
OK, maybe theyre not quite magic.
But theres a lot to love about Roth IRAs: The tax-free growth.
The flexibility to access your contributions in an emergency.
So lets talk about the Roth IRA rules you gotta know.
Whats a Roth IRA?
A Quick Introduction
ARoth IRAis a pop in of individual retirement arrangement.
Unlike a401(k), an IRA isnt connected to your job.
As you continue to contribute (ideally to the max each year!
), your money compounds.
Then, when you reach retirement, that nest egg is all yours.
Youve already given the government its cut.
Our team has compiled alist of creative waysyou can fatten your bank account this week.
This is a long list, so dont get overwhelmed.
Well keep it updated as offers changes or expire.
Atraditional IRAreduces your taxable income now.
But your taxes come due when you start withdrawing your money.
But a growing number of employers are jumping on the Roth bandwagon andoffering a Roth 401(k).
The IRS updates theRoth IRA limitson income and contributions for inflation each year.
Beyond that, the rules dont change much.
Did you know?
Thats $500 more than the 2022 limit.
In both 2022 and 2023, that amount is $1,000.
(Theres a way around the income caps, but well get to that shortly.)
2023 Roth IRA Income Limits
4.
You fund a traditional IRA, then convert it to a Roth IRA.
Youll pay income taxes but avoid the 10% early withdrawal penalty under the following circumstances.
However, you still must have had the account for at least five years.
But with a Roth IRA, you never have to withdraw money.
If you leave it to someone else, theyll eventually have to take distributions.
The deadline for funding a Roth IRA for any calendar year is tax day of the following year.
Cheers to funding your future in 2023 and beyond.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
