🙄 Why doesn’t the government want you to have a Roth IRA if you make a lot of money?
⚡️Most people are unaware that a Roth IRA offers great tax-free earnings potential when you withdraw it 💸
But there is a maximum contribution limit if you are under age 50 of $6,000 🔐 In short the government put in a rule that benefits people making less than $144K a year.
What do you think? 🤷♂️
👉️ Is it fair to only offer it to people making less than $144K or should it be offered to everyone?
Leave me your comments….
#taxes #millionairemindset #entrepreneurship #success…(read more)
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What Happens If I Reach The Income Limit In My ROTH IRA?
A ROTH IRA is an excellent retirement savings vehicle for individuals looking to save for their future. This type of retirement account offers tax-free growth and tax-free withdrawals in retirement, making it a highly desirable option for many investors. However, there are income limits that determine who can contribute to a ROTH IRA, and what happens if you exceed these limits?
The income limits for contributing to a ROTH IRA are based on your modified adjusted gross income (MAGI) and tax filing status. For 2021, the income limits are as follows:
– Single filers: The ability to contribute to a ROTH IRA starts to phase out at a MAGI of $125,000 and is completely phased out at $140,000.
– Married filing jointly: The ability to contribute starts to phase out at a MAGI of $198,000 and is completely phased out at $208,000.
If you find that you have exceeded these income limits, you may wonder what happens to your existing ROTH IRA or any contributions you have made for the year. Here are a few things to consider:
1. You cannot make new contributions: If you exceed the income limits, you are not eligible to make new contributions to your ROTH IRA for the current tax year. This means that any contributions you make after reaching the income limit will be considered excess contributions and will be subject to a 6% penalty tax unless corrected in a timely manner.
2. You may need to recharacterize your contributions: If you have already made contributions to your ROTH IRA for the current tax year, you may need to recharacterize those contributions as traditional IRA contributions. This involves notifying your IRA custodian of the change and filing the necessary paperwork with the IRS to reclassify your contributions.
3. Existing ROTH IRA funds are not affected: If you have a ROTH IRA that has already been funded and you exceed the income limits, you do not have to remove the funds from your ROTH IRA. The income limits only apply to new contributions, so your existing ROTH IRA balance remains intact and continues to grow tax-free.
4. Consider a backdoor ROTH IRA: If you find that you are no longer eligible to contribute to a ROTH IRA due to income limits, you may consider a backdoor ROTH IRA. This involves making a non-deductible contribution to a traditional IRA and then converting those funds to a ROTH IRA. This strategy allows high-income individuals to still take advantage of the benefits of a ROTH IRA, albeit through a more complex process.
It’s important to note that tax laws and retirement account rules are complex and can change over time, so it’s always best to consult with a financial advisor or tax professional if you find yourself in a situation where you have exceeded the income limits for a ROTH IRA. They can help you navigate the rules and explore alternative options for saving for retirement.
Roth IRAs were created to help people retire who don’t have access to the types of accounts wealthier people do. It’s basically a helping hand thing and if everyone had access to it the economy wouldn’t like it
Without stable or passive income you can't run an IRA. No doubt, A good way of growing and saving your money is through investing. You don't need to have much before you can invest. "That little money you have now can make you millions if you invest it wisely". I wasn't financially free until my 40's and I'm still in my 40's, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn't matter if you don't have any of them right now, you can start TODAY regardless of your age INVEST and change your future! Investing is a grand choice I made.
Since the investment is capped at 6000 or 7000 if you’re over 50, everyone should be able to do it, gives a shit with your salary is when the investment is capped, Government is not that smart
It’s tax free because you pay the tax before putting the money into the Roth IRA
If you make more than 144 thousand dollars a year paying some taxes won't hurt you. The tax free benefit should come in for the people qho won't be able to save as much for their retirement and will actually need the extra money
Everyone should be able to use it. It could also be called investment.