There is no way that there is a retirement account that can grow, and grow and grow….TAX FREE!!!
In my, almost 25 years, of being employed I had no knowledge of a Roth IRA. Growing up there were no family or friends that educated me about saving for retirement, let alone investing. That’s a sad reality but others can’t teach you what they don’t know. This is one of the main reasons I created this blog. I want to educate those around me, and whoever else, on the importance of saving and investing.
I first heard the term Roth IRA from a co-worker, I was embarrassed that I didn’t know what it was, how it worked and why I needed one. So I began to research what it was so that I could be well versed in the subject the next time it came up. Here’s what I learned…
What is a Roth IRA?
A Roth IRA is an individual retirement account and an amazing way to get your feet wet in investing. This account is so great because contributions made to this account are made with after tax dollars. Meaning you’ve already paid taxes so the funds in this account will grow tax free and won’t be taxed when withdrawn in retirement. How awesome is that?
Who can contribute to a Roth IRA?
Roth IRA contributions can be made by anyone that’s earning an income. Now, there are income limits. As of 2019, you can only make contributions if your modified adjusted gross income (MAGI) is less than $137,000 for single employees. The income limit for married couples filing jointly is $203,000. There is no age limits to the Roth IRA, if you have earned income you can contribute.
How much can you contribute?
Since it’s beginning in 1975, the contribution limits have increased over the years. In 1975 the limit was $1,500, but this year the contribution limit was increased to $6,000 per year. Since 2002, individuals 50 years or older are allowed to make additional contributions as a way to “catch up”. Those additional contributions are currently $1,000 annually.
Keeping up so far? I know this is a lot of info so I’m gonna stop here. Come back next week as I’ll continue to dive into the Roth IRA.
If you have any questions or comments please leave them below!
Until Next Time