Page 14 - EQ Magazine Issue #3

RETIREMENT RESOURCE

How Much Can You Contribute to a

Roth IRA for 2019?

By Thomas Blanton | Michael Desenne

he Roth IRA contribution limit is $6,000 for 2019, up Roth IRA contribution for the prior year. For most
from $5,500 in 2018. Retirement savers 50 and older taxpayers, the deadline for filing 2019 tax returns is April
Tcan contribute an extra $1,000. Income limits apply. 15, 2020.

Retirement savers have yet another reason to celebrate the Roth IRAs can help you build a sizable nest egg if you start
Roth IRA: The maximum amount that can be contributed saving early enough. For example, a 25-year-old who
to a Roth in 2019 has been increased by $500. However, contributes $5,500 a year to a Roth IRA and has an annual
now that the income limits to qualify for the maximum return of 6% will accrue a nest egg of $902,262 by age
contribution to a Roth 65. If that 25-year-old is in
IRA have also been the 22% tax bracket and
increased. invested $5,500 a year in a
Here’s what you need taxable account earning a
to know. 6% annual return, the
balance after 40 years
would amount to about
2019 Roth IRA $643,500.
Contribution Limits
and Income Limits
The difference is the brake
that having to pay the IRS
The maximum amount on each year's earnings puts
workers can contribute on compounded growth. If
to a Roth IRA for 2019 you can't afford to save the
is $6,000 if they’re entire $5,500 without the
younger than age 50. help of a tax
Workers age 50 and deduction—which, if you
older can add an extra contribute to a traditional
$1,000 per year in IRA and write off $5,500 in
”catch-up” the 22% bracket brings the
contributions, bringing out-of-pocket cost to
the total contribution $4,290—you might be
to $7,000. It’s the first better off with a traditional
increase in the amount that can be contributed to a Roth IRA.
IRS since 2013.
Roths are also more flexible than traditional, deductible
Roth IRAs vs. Traditional IRAs IRAs. You can withdraw contributions to a Roth account
anytime, tax- and penalty-free. If you want to withdraw
Unlike contributions to a traditional IRA, which may be tax- earnings tax-free, though, you must be at least age 59 1/2,
deductible, a Roth IRA has no up-front tax break. Money and you must have owned the Roth for at least five years.
goes into the Roth after it has already been taxed. But The clock on the five-year holding period starts ticking on
when you start pulling money out in retirement, your January 1 of the year you open the account.
withdrawals will be tax-free.
Also, Roths—unlike traditional IRAs—are not subject to
You can open a Roth IRA through a bank, brokerage, required minimum distributions (RMDs) after age 70 1/2.
mutual fund or insurance company, and you can invest And you can add funds to it at any age, provided you have
your retirement money in stocks, bonds, mutual funds, earned income from, say, a job or self-employment.
exchange-traded funds and other approved investments. Traditional IRAs close the door to new contributions once
You have until the federal tax filing deadline to make your you turn 70 1/2, even if you’re working.

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