7 Things You Need to Know About Roth IRAs to Maximize Tax-Free Income

Roth IRAs offer great tax-free income benefits, but to make the most of them in retirement, here are seven things you need to know: Contribution Limits: In 2024, you can contribute up to $7,000 annually ($8,000 if 50+), across both Roth and traditional IRAs. Access to Contributions: You can withdraw your contributions at any time, tax-free and penalty-free. Only earnings are subject to penalties if withdrawn early. The Five-Year Rule: To withdraw earnings tax-free, the Roth IRA must be held for at least five years. Income Limits & Backdoor Roths: High earners may not be able to contribute directly, but a backdoor Roth strategy can help. Consult a financial advisor for guidance. No RMDs: Roth IRAs don’t require minimum distributions, allowing your funds to grow as long as you want. No Impact on Social Security: Roth IRA withdrawals won’t count toward your provisional income, potentially lowering your Social Security tax. No Medicare Surcharge: Roth withdrawals don’t affect your adjusted gross income, helping you avoid higher Medicare premiums. By understanding the points above, you can use a Roth IRA to manage taxes and increase flexibility in your retirement. Submit your request to join James: On the Ready For Retirement podcast: Apply Here On a Retirement Makeover episode: Apply Here Timestamps: 0:00 - What is a Roth IRA? 1:38 - Free withdrawals 3:15 - The 5-year rule 4:49 - Income thresholds 6:01 - Backdoor Roth contribution 8:18 - No RMDs 9:26 - Not provisional income 12:10 - Not part of IRMA calculations 13:06 - Income requirement nuances 14:49 - Wrap-up Create Your Custom Strategy ⬇️ Get Started Here. Join the new Root Collective HERE!