It’s Official: Roth IRA Income Ranges Have Increased for 2023

It’s Official: Roth Ira Income Ranges Have Increased For 2023

If you’re trying to rack up tax-free income during retirement, the Roth IRA (individual retirement account) may be your best friend. A Roth IRA is loaded with benefits you can enjoy now and in the future, but you have to meet the income requirements to contribute money to the account. Thanks to the latest income ranges released by the IRS, you may have a better chance of being a candidate for Roth IRA contributions in 2023.

Below, we break down the 2023 income ranges for Roth IRAs to help you plan ahead.

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Roth IRA income limits for 2022 and 2023

The Roth IRA income ranges have increased from 2022 to 2023. If your income stopped you from stashing money away in a Roth IRA in 2022, the new income limits may make it easier for you to join the Roth IRA club.

Let’s say your tax filing status is single. The income limit for a full Roth IRA contribution in 2023 is $138,000, up from $129,000 in 2022. After you reach that income limit, you’ll enter the phaseout range and your maximum contribution limit will be reduced. Your Roth IRA contribution power is completely eliminated once your income reaches $153,000, up from $144,000 in 2022.

The income number you’ll need to keep your eyes on is your modified adjusted gross income (MAGI). It’s just your adjusted gross income with a few extra potential adjustments. Once you have that number, you can determine if you have the key to maximize the Roth IRA in 2023.

Check out the Roth IRA contribution limits for 2022 and 2023 below to see if you have a chance to take advantage of the Roth IRA. If you qualify to tuck away money in a Roth IRA in 2022, you have until the tax filing deadline (April 15, 2023) to add money to your account.

2022 TAX FILING STATUS

INCOME LIMIT FOR A FULL ROTH IRA CONTRIBUTION

ROTH CONTRIBUTION PHASES OUT ENTIRELY FOR INCOME ABOVE

Single and head of household

$129,000 $144,000

Married filing jointly

$204,000 $214,000

Data source: IRS.

2023 TAX FILING STATUS

INCOME LIMIT FOR A FULL ROTH IRA CONTRIBUTION

ROTH CONTRIBUTION PHASES OUT ENTIRELY FOR INCOME ABOVE

Single and head of household

$138,000

$153,000

Married filing jointly

$218,000

$228,000

Data source: IRS.

How much can you contribute to a Roth IRA in 2023?

After you’ve confirmed that you fall within the income ranges to contribute to a Roth IRA, it’s time to determine how much you plan to contribute.

For 2023, you can contribute up to $6,500 if you are under 50 and $7,500 if you are 50 and older. If you are still working on contributions for 2022, you can contribute up to $6,000 if you are under 50. The $1,000 catch-up contribution still applies if you are 50 or older at the end of the calendar year.

Anyone who meets the income requirements can contribute to a Roth IRA. That includes your 12-year-old who earned money from acting gigs in the summer. If you are 70 years old and still earning money, you can also contribute to a Roth IRA. However, your Roth IRA contribution cannot exceed your earned income for the year. Let’s say you earn $4,000 in 2023. You won’t be able to contribute more than $4,000 to a Roth IRA for the year.

Contributing the maximum amount to a Roth IRA can pay off. The more money you contribute, the more money you’ll have to invest in assets of your choice, including individual stocks and exchange-traded funds.

You also have a chance to fund your account with after-tax dollars. That means you pay your tax bill upfront, contribute money to the account, invest in assets, and watch your money grow tax-free. When you turn 59 1/2 and have satisfied the five-year rule, you can withdraw every penny in your account without having to worry about a fat tax bill.

Take advantage of the Roth IRA while you can

Your ability to contribute to a Roth IRA depends on your income. If you earn too much money, you’ll have to kiss direct contributions to a Roth IRA goodbye.

Do your research and determine if a Roth IRA makes sense for you. If a Roth IRA aligns with your goals, create a plan that allows you to stash away as much as possible. You may not be able to contribute to a Roth IRA forever, so it’s best to create an action plan right now that allows you to maximize your contributions and benefits.

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