Roth IRAs are getting increasingly popular as people see how sacrificing a small tax benefit now can lead to big tax savings later.

This video reviews the guidelines for contributing to a Roth IRA, and shows how distributions are handled on the tax return.

2022 UPDATE:

Roth IRA Contribution AGI phaseouts for 2022:
$129,000 – $144,000 (S, HOH, QSS); $204,000 – $214,000 (MFJ)

To learn the differences between traditional and Roth retirement accounts, click here:

For a deep dive into what’s on a 1099-R Form, click here:

RESOURCES AND ADDITIONAL INFORMATION:

IRS Form 8606: “Non-deductible IRAs”:

IRS Publication 590-A: “Contributions to Individual Retirement Arrangements (IRAs)”:

IRS Publication 590-B “Distributions from Individual Retirement Arrangements”:

Investopedia: “What is a Roth IRA?”:

The Tax Geek on Twitter: @taxgeekusa

The Tax Geek on Reddit: www.reddit.com/r/askataxgeek

Intro Music: “Bluesy Vibes” – Doug Maxwell – YouTube Audio Library

Background and Outro Music: George Street Shuffle, Kevin McLeod, via YouTube Audio Library

DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or investment advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or investment professional.

The tax information in this video is based on tax law and IRS regulations in place when this video was published, and is subject to the whims of Congress….(read more)

LEARN MORE ABOUT: IRA Accounts

INVESTING IN A GOLD IRA: Gold IRA Account

INVESTING IN A SILVER IRA: Silver IRA Account

REVEALED: Best Gold Backed IRA

A Roth IRA is a retirement savings account that allows you to set aside after-tax money for retirement. It is a great way to save for retirement, as your money grows tax-free and you can withdraw it tax-free in retirement. Here is a guide to help you understand Roth IRAs and how to use them to your advantage.

What is a Roth IRA?

A Roth IRA is a type of retirement savings account that allows you to invest after-tax money into stocks, bonds, mutual funds, and other investments. The money you contribute to a Roth IRA is not tax-deductible, but your earnings grow tax-free, and you can withdraw your money tax-free in retirement.

Who Can Contribute to a Roth IRA?

Anyone with earned income (like wages, salaries, tips, bonuses, or self-employment income) can contribute to a Roth IRA. There are income limits to how much you can contribute, and the amount you can contribute may be reduced or phased out depending on your income level.

How Much Can I Contribute to a Roth IRA?

In 2021, you can contribute up to $6,000 to a Roth IRA. If you are age 50 or older, you can contribute an additional $1,000 as a “catch-up” contribution.

What Are the Benefits of a Roth IRA?

The main benefit of a Roth IRA is that your money grows tax-free and you can withdraw it tax-free in retirement. This means you can potentially have more money in retirement, as you won’t have to pay taxes on your withdrawals. Additionally, you can withdraw your contributions at any time without penalty, so it can be a great way to save for short-term goals.

How Do I Get Started With a Roth IRA?

To get started with a Roth IRA, you’ll need to open an account with a financial institution like a bank, credit union, or online broker. Once you’ve opened an account, you can start making contributions. You can make contributions up to the maximum allowed each year, or you can set up an automatic contribution plan and make smaller, regular contributions.

A Roth IRA can be a great way to save for retirement, as your money grows tax-free and you can withdraw it tax-free in retirement. With this guide, you now have a better understanding of Roth IRAs and how to use them to your advantage.