Roth IRA accounts are retirement savings accounts that you can contribute to after taxes. Your earnings grow tax-free, and generally, you won’t have to pay taxes or penalties on withdrawals once you reach age 59 and a half. The IRS sets the annual contribution limit for Roth IRA accounts at $6,000 (or $7,000 if you are age 50 or older) for 2022. The limits are $6,500 and $7,500 for 2023. Maximizing your Roth IRA contributions each year can help you build significant retirement savings, but it may not be your most critical financial priority.
Should You Max Out Your Roth IRA Contributions?
Whether you should max out your Roth IRA contributions depends on your personal circumstances. First, let’s talk about contribution limits.
In 2022, you can contribute a maximum annual amount of $6,000 to a Roth IRA. You can contribute an additional $1,000 if you are age 50 or older. In 2023, the maximum limits are $6,500 and $7,500 for those who are over age 50.
You also need to keep in mind that there are restrictions on who can contribute to a Roth IRA at all. Generally, single individuals and heads of households with modified adjusted gross incomes above certain limits cannot contribute to a Roth IRA.
Source: https://www.thebalancemoney.com/why-you-should-shouldnt-max-out-roth-ira-5236651
Leave a Reply