Roth IRA Contribution Limits for 2023: What You Need to Know
The Roth IRA contribution limits have increased for the 2023 tax year, allowing you to tuck away up to $6,500 if you're under 50, and an extra $1,000 if you're over 50. This is great news for those who are looking to save for retirement. In addition to the increased contribution limit, the income phase-outs for Roth IRA have also increased for the 2023 tax year.
For 2023, if you are married and file jointly, you can make a full Roth contribution if your combined Modified Adjusted Gross Income (MAGI) is less than $218,000, a partial Roth contribution if your MAGI is between $218,000 and $228,000, and no contribution if your MAGI is over $228,000. For those who are single or head of household, the income limit is $125,500 and $142,500, respectively.
It’s important to note that while the contribution limit has increased, the income limits for Roth IRA still apply. This means that if your MAGI is above the limit, you will not be able to make a Roth IRA contribution. The income limits are based on your filing status and total MAGI.
In addition to the Roth IRA contribution limits, the annual contribution limit for IRAs next year also increased to $6,500. This applies to both traditional and Roth IRA. The income phase-out for Roth IRA contributions next year for single filers is $125,500 to $140,500, and for joint filers, it is $198,000 to $208,000.
The Roth IRA is an attractive retirement option for those who want to save for their future and take advantage of tax-free growth. With Roth IRA, your contributions are not tax deductible, but your earnings are tax-free when they are withdrawn in retirement. This means that if you make a Roth IRA contribution now, your money will grow tax-free over time, and you won’t have to pay taxes on the money when you withdraw it in retirement.
The new law also increases the maximum annual contribution limits for all types of retirement accounts, including Roth IRA. The new 2023 income limits for Saver’s Credit-eligible workers are $73,000 for married couples filing jointly, $54,750 for heads of household, and $36,500 for single filers.
It’s important to note that there are other factors that may affect how much you can put into a Roth IRA, which has income limits. For example, if you are covered by a workplace retirement plan such as a 401(k) or 403(b), the amount you can contribute to a Roth IRA may be reduced if your income is above certain levels. It’s important to consult with a qualified tax professional to ensure that you are making the most of your retirement savings.
For those who are looking to save for retirement, the Roth IRA is an attractive option. The increased contribution limit for 2023 makes it an even more attractive option for those who want to take advantage of tax-free growth. While there are still income limits that apply to Roth IRA contributions, the increased contribution limit and phase-outs make it easier for those who are looking to take advantage of the tax benefits of a Roth IRA.
