Steadily contribute to a Roth IRA account over your lifetime and watch your savings flourish. With a Roth IRA, investors make post-tax contributions, allowing them to build tax-deferred growth on their earnings over time. When it’s time to withdrawal funds during retirement, qualified distributions are tax free. Just check out the income restrictions to make sure you qualify to contribute to a Roth.
To contribute to a Roth IRA, you or your spouse must have earned income. This account also has income phase-out ranges that you need to be aware of that determine whether or not you can make a full or partial contribution.
| Tax Filing Status | 2023 Tax Year | 2024 Tax Year |
|---|---|---|
| Single or Head of Household |
$138,000 - $153,000 |
$146,000 - $161,000 |
|
Married Filing Jointly |
$218,000 - $228,000 |
$230,000 - $240,000 |
|
Married Filing Separately |
$0 - $10,000 |
$0 - $10,000 |
A qualified distribution from a Roth IRA is tax-free and penalty-free, providing the 5-year aging requirement has been satisfied and one of the following has been met:
· Over age 59.5
· Death or disability
· Qualified first-time home purchase
Note: You can always withdraw contributions you made to your Roth IRA at any time, tax and penalty-free.
A non-qualified distribution is subject to taxation of earnings and a 10% additional tax unless an exception applies. Several exceptions exist that enable Roth IRA account holders to withdraw cash from Roth IRAs that otherwise would be subject to income taxes and a 10% penalty:
· You have unreimbursed medical expenses exceeding 7.5% of your Adjusted Gross Income (AGI).
· You are paying medical insurance premiums after losing your job.
· The distributions are not more than your qualified higher educational expenses (for yourself or eligible family members).
· The distribution is due to an IRS levy of the qualified plan.
· The distribution is a qualified reservist distribution.
· The distribution is a qualified disaster recovery assistance distribution.
· The distribution is a qualified recovery assistance distribution.
It’s easy to invest with a Roth IRA in just 3 steps:
· Open a Roth IRA account at Quest.
· Fund your account by rolling over an old 401k, transferring money from another IRA, or making a contribution.
· Use the Investment Hub in the Client Portal to self-direct your investment.
You first need to find a custodian that will hold non-traditional or “alternative” investments and establish an IRA with them. You will then locate real estate you want to purchase, and typically, your custodian will require you to sign some internal forms. After making sure the contract is in the name of the IRA, your custodian will purchase the property for you on behalf of your IRA.
You can move a 401k to a Roth IRA. Typically, you will rollover the 401k into a Traditional IRA (keeping the taxes the same between like accounts) and then will initiate a Roth Conversion to get the funds from the Traditional IRA, a pre-tax account, to the Roth IRA, and after-tax account. Note: a Roth conversion is a taxable event.
You aren’t allowed to borrow against or take out a common loan from a Roth IRA.
Do you have questions about alternative investing? Our Certified IRA Specialists are here to help. Schedule a one-on-one consultation to discuss your financial future today.
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