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,
- 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.
- Roth IRA earnings can grow tax-free because contributions are made after taxes were already paid.
- 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.
- There are no mandatory withdrawals until after the death of the owner.
- When someone inherits a Roth IRA, they won’t pay income taxes.
Yet just like any investment option, Roth IRAs do have some disadvantages.
- Since contributions are made with money that was already taxed, you don’t get a tax deduction when you contribute.
- 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