Contributions to Roth IRAs went up by $500 in 2023 and the great news is the limit will increase by another $500 in 2024! That means people under the age of 50 will be able to contribute $7000 into a Roth IRA, while those 50 and older will be able to contribute $8000. Keep in mind, not everyone is eligible to contribute to a Roth IRA. The 2024 income limit is $163,000 for individuals and $240,000 for married couples filing jointly, but high-income earners have other tax-advantaged ways of investing.

Roth IRAs offer many benefits including,

  1. Anyone of any age can contribute if they have a qualifying earned income. They can work for someone else or own their own business. If a person earns a salary, commission, or tips, they have a qualified earned income. 
  2. Roth IRA earnings can grow tax-free because contributions are made after taxes were already paid. 
  3. The owner can make qualified tax-free withdrawals with no penalty when they buy their first home, pay for higher education, to pay for health insurance when they’re unemployed, cover medical expenses, if they suffer a disability, or when they turn age 59 ½. 
  4. There are no mandatory withdrawals until after the death of the owner.
  5. When someone inherits a Roth IRA, they won’t pay income taxes. 

Yet just like any investment option, Roth IRAs do have some disadvantages. 

  1. Since contributions are made with money that was already taxed, you don’t get a tax deduction when you contribute. 
  2. Withdrawals from a Roth IRA cannot be made for 5 years after the date of the first contribution. 

Contact Alloy Investment Management for investment advice and guidance that can help you achieve your goals. 800-689-3935