ROTH IRA CHANGES IN 2023! Contribution limits have gone up, meaning you can have a lot more money at retirement. Like & Subscribe!

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The Roth IRA is a popular investment vehicle that allows individuals to potentially grow their retirement savings tax-free. In 2023, there are some changes that will take place regarding Roth IRAs that investors should be aware of.

One major change is the increase in contribution limits. Currently, individuals can contribute up to $6,000 per year ($7,000 if over the age of 50) to a Roth IRA. Starting in 2023, these limits will increase to $6,500 per year ($8,000 if over the age of 50).

Another change is that Roth IRA income limits will be adjusted for inflation. Currently, individuals who earn more than $140,000 (or $208,000 for married couples filing jointly) are not eligible to contribute to a Roth IRA. These income limits will adjust upward in 2023 to reflect inflation.

Additionally, the age for required minimum distributions (RMDs) from Roth IRAs will be raised from 72 to 75. This means that individuals will have an extra three years to let their investments grow tax-free before being required to take withdrawals.

One change that may have a larger impact on high-income earners is the proposed elimination of the backdoor Roth IRA. Currently, individuals who earn too much to contribute directly to a Roth IRA can still do so by making non-deductible contributions to a traditional IRA and then converting those funds to a Roth IRA. However, this loophole is likely to be closed in 2023, making it more difficult for high-income earners to take advantage of the tax benefits of a Roth IRA.

Overall, the changes to Roth IRAs in 2023 are generally positive for investors. The increased contribution limits and adjustment for inflation will help individuals save more for retirement, while the delay in RMDs will provide more time for investments to grow. However, for high-income earners, the elimination of the backdoor Roth IRA may make it more difficult to maximize tax savings. As always, it is important to consult with a financial advisor to determine the best investment strategy for your individual situation.