Maxed Out Your ROTH IRA | What’s Next?

Congrats!!! You maxed out your Roth IRA, what’s next? In this video I go over 3 possible avenues to go down after you max our your Roth IRA! Maxing out your Roth IRA is a huge step since it is tax free money once you reach 59.5 (if you withdrawal before 59.5, there is a penalty). Maxing out your Roth IRA, in my opinion, is a huge thing to do! Let’s take a look at the possible avenues:

First off, before I mention the avenues, here is a hint: After you max out your Roth IRA, use the remainder of the months in the year to get a head start on the following years Roth IRA. For example, if you max out the Roth in August. You could save a couple hundred dollars each month for the remainder of the current year so in the following year, you will have a head start!

Avenue #1: Contribute more to another retirement account

If you are not wanting to touch the money until you reach 59.5, this avenue shoots to contribute more to another retirement account, such as a 401k.

Avenue #2: Contribute more to a taxable account

If you are wanting to touch the money before retirement age, but you do not want to get hit with a penalty, this avenue will allow you to invest, yet not have any withdrawal penalties (other than taxes!).

Avenue #3: Spend what you earn

If you are happy with your Roth IRA and do not feel the need to invest more, then this avenue allows for you to spend what you earn after the ROTH IRA is maxed out. Enjoy the money you earn this year, then next year, max out your ROTH IRA, then spend!

There are obviously more than these 3 avenues, as well as there is no one correct avenue, YOU DECIDE FOR YOU!!!

Thanks for watching!!

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DISCLAIMER: Kolin Hayes, including but not limited to any guests appearing in his videos, are not financial/investment advisors, brokers, or dealers. They are solely sharing their personal experience and opinions; therefore, all strategies, tips, suggestions, and recommendations shared are solely for entertainment purposes. There are financial risks associated with investing, and Kolin Hayes’s results are not typical; therefore, do not act or refrain from acting based on any information conveyed in this video, webpage, and/or external hyperlinks. For investment advice please seek the counsel of a financial/investment advisor(s); and conduct your own due diligence.

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REVEALED: Best Gold Backed IRA

When it comes to saving for retirement, a Roth IRA is a great investment option as it offers tax-free growth and withdrawals. However, there is a limit to how much you can contribute to this type of account each year. As of 2021, the contribution limit for individuals under 50 is $6,000, and those over 50 can contribute an additional $1,000 catch-up contribution.

If you have maxed out your Roth IRA contributions for the year, congratulations! This means you are investing in your future and taking advantage of the potential tax-free growth offered by this type of account. However, once you have reached the contribution limit, you may be wondering what’s next.

Here are some options to consider:

1. Contribute to a Traditional IRA – While the contribution limits for Traditional IRA accounts are the same as Roth IRAs, the tax deduction and eligibility for contributions vary based on income and employer-sponsored retirement plans. If you are not eligible to contribute to a Roth IRA or want to diversify your retirement accounts, a Traditional IRA may be a good option for you.

2. Invest in a taxable brokerage account – If you want to continue investing in stocks, bonds, or other assets, a taxable brokerage account can be a great way to do so. While the growth in this type of account is not tax-free, there are no contribution limits, and you can withdraw funds at any time without worrying about penalties or taxes.

3. Focus on debt repayment – If you have high-interest debt, such as credit card debt or a personal loan, consider using the money you would have contributed to your Roth IRA to pay off these debts. This can help you eliminate the burden of interest payments and improve your overall financial health.

4. Increase contributions to your employer’s retirement plan – If you have a 401(k) or other employer-sponsored retirement plan, consider increasing your contribution percentage. This will help you save more for retirement while taking advantage of any employer match programs that may be available.

5. Consider using a Health Savings Account (HSA) – If you have a high-deductible health plan, you may be eligible to contribute to a Health Savings Account (HSA). Similar to a Traditional IRA, contributions to an HSA are tax-deductible, and the growth is tax-free. These funds can be used to pay for qualified medical expenses, and any funds remaining at age 65 can be withdrawn penalty-free for any reason.

In conclusion, maxing out your Roth IRA contributions is a great achievement. However, there are many other ways you can continue to invest in your future and improve your overall financial health. Consider some of the options above or consult with a financial advisor to determine the best course of action for your unique situation.