The clock on the five-year holding period starts ticking on January 1 of the year you open the account. If you want to withdraw earnings tax-free, though, you must be at least age 59 1/2, and you must have owned the Roth for at least five years. You can withdraw contributions to a Roth account anytime, tax- and penalty-free. Roths are also more flexible than traditional, deductible IRAs. But when you start pulling money out in retirement, your withdrawals will be tax-free.Īlso, Roths-unlike traditional IRAs-are not subject to required minimum distributions (RMDs) after age 72. Money goes into the Roth after it has already been taxed. Unlike contributions to a traditional IRA, which may be tax-deductible, a Roth IRA has no up-front tax break. The phase-out range for a married person filing a separate return who contributes to a Roth IRA is not adjusted annually for inflation and remains $0 to $10,0. Your maximum contribution limit gradually drops if your income exceeds those levels, and you won't be able to put any money into a Roth IRA in 2023 once your income reaches $153,000 if single or $228,000 if married and filing jointly ($144,000 and $214,0). To qualify for the maximum contribution in 2023, your modified adjusted gross income must be less than $138,000 if single or $218,000 if married and filing jointly (up from $129,000 and $204,000, respectively, for 2022). There's another important update for Roth IRA users as well: the actual amount that you can contribute to the account is reduced for high-income earners. The additional IRA "catch-up" contribution for people 50 and over is not subject to an annual cost-of-living adjustment and stays at $1,0 (for a total 2023 contribution limit of $7,500 if you're at least 50 years old). The reason for the bump is rising inflation, which boosted the limit that had been stuck at $6,000 since 2019.
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