If a Roth is good why not look at the Mega Roth?
We have been fans of the Roth IRA for most savers for many years because they grow tax free. Unfortunately, the IRS limits who can contribute to a Roth IRA and they also limit how much you can contribute if you are eligible. For those reasons, we can help clients with strategies that allow them to participate in Roths, sometimes being able to get around the income limits and also putting away more than the standard contribution limits.
Wait, remind me. What is a Roth IRA?
A Roth IRA is an individual retirement account that allows you to set aside after-tax income. In Roth IRAs, your money grows tax free (as long as you follow the rules).
Got it. You’ve caught my attention. Now, how much can I contribute?
Unless your household income is more than $193,000/year, then you can deposit $6,000/year. Plus, if you are over age 50, you can deposit an extra $1,000.
What if my household income is more than $193,000?
At Cardinal Investment Group, we help clients with higher incomes use the Back-Door Roth strategy which allows them to put money into a traditional IRA and then convert it to a Roth. The reason we do this, is there isn’t an income limit for this.
So, what if I want to save more than $6,000/year?
That’s where the Mega Back-Door Roth IRA comes in. This isn’t something that everyone can do but we can assess your situation and see if you are eligible. In some cases, regardless of income, investors can use this strategy to save as much as $37,000/year into their Roth IRA.
If you would like to know more about maximizing your tax-free investment growth with a Roth IRA, then reach out to our advisors for a free consultation.