With Roth IRAs, you pay taxes on contributions to yield tax-free distributions (if qualified) down the road. You may withdraw your contributions at any time without incurring duplicate taxes or early distribution penalties. Furthermore, unlike with Traditional IRAs, you may continue to make Roth IRA contributions beyond age 70½.
You must earn verifiable and taxable income to make Roth IRA contributions. Your modified adjusted gross income (MAGI) may affect your ability to contribute the full annual limit. The following MAGI ranges apply for the 2019 tax year:
The following MAGI ranges apply for the 2020 tax year:
|Tax Year||Annual Contribution Limit |
(below age 50)
|Annual Contribution Limit |
(age 50 or above)
Cash or assets that you transfer, roll, or convert from another qualified plan will not count against these annual limits. You can make a contribution to a new Roth IRA for a given tax year even if you open the account in the following calendar year.
EXAMPLE: You open a Roth IRA on February 1, 2020. You can still make 2019 contributions until April 15, 2020 even though your account was not open during the 2019 calendar year.
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