Welcome to the second installment of our Roth IRA insight series! In this video, we’ll delve into the income and contribution limits for 2023, shedding light on crucial details that can impact your retirement savings strategy.
Roth IRAs come with income limits that determine your eligibility. Depending on where you fall within these limits, your contribution capacity may be affected. For 2023 and 2024, Traditional and Roth IRA contribution limits are set at $6,500 and will increase to $7,000 by 2024. If you’re 50 or older by December 31st, the “catch-up” limit is an additional $1,000 for both 2023 and 2024.
Let’s explore the 2023 Roth IRA income limits based on your modified adjusted gross income (AGI) and tax filing status:
- Married filing jointly or qualifying widow(er) with modified AGI less than $218,000: You can contribute up to the limit.
- Married filing jointly or qualifying widow(er) with modified AGI between $218,000 and $228,000: You can contribute a reduced amount.
- Married filing jointly or qualifying widow(er) with modified AGI exceeding $228,000: Your contribution limit is zero.
- Married filing separately and lived with your spouse, with modified AGI less than $10,000: You can contribute a reduced amount.
- Married filing separately and lived with your spouse, with modified AGI exceeding $10,000: Your contribution limit is zero.
- Single, head of household, or married filing separately without living with a spouse, with modified AGI less than $138,000: You can contribute up to the limit.
- Single, head of household, or married filing separately without living with a spouse, with modified AGI between $138,000 and $153,000: You can contribute a reduced amount.
- Single, head of household, or married filing separately without living with a spouse, with modified AGI exceeding $153,000: Your contribution limit is zero.
If your contribution must be reduced, follow specific steps to determine your reduced contribution limit based on your modified AGI.
If your income makes you ineligible for a Roth IRA, you can explore the Backdoor Roth IRA option. This involves contributing to a nondeductible traditional IRA and then rolling it over into a Roth IRA.
Thank you for joining us for this informative video. Be sure to catch part three for continued education on Roth IRAs!
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