An individual retirement account, or IRA, is a powerful savings tool for retirement. But there are a few tricks you might not know to make the most of your retirement savings account. Here are four unexpected ways to level up your IRA.

A piggy bank sitting on top of blocks with the letters I R A.

Image source: Getty Images.

1. Get paid to contribute

If you're struggling to contribute to your IRA, the federal government wants to help you out. You can receive a tax credit just for contributing up to $2,000 to your retirement account if your income is below a threshold. It's officially called the Retirement Savings Contribution Credit, but everyone just calls it the "Saver's Credit."

Here are the credit and income limits for 2021:

Credit Rate

Married Filing Jointly

Head of Household

All Other Filers

50% of your contribution*

AGI < $39,500

AGI < $29,625

AGI < $19,750

20% of your contribution




10% of your contribution




*up to $2,000 per person
Table source: IRS 

That tax credit stacks with the tax deduction you can take for contributing to a traditional IRA. If you're on the threshold of qualifying for the next tier, you can use the IRA deduction in order to push your AGI below the threshold. That can maximize your tax savings on your contribution, and may be a good reason to choose a traditional over a Roth IRA.

If your income is low enough to qualify for the Saver's Credit without any additional adjustments, you may be better off contributing to a Roth IRA.

2. Access your IRA early, before 59½ 

IRAs are meant for retirement, but what if you retire before 59½, the minimum age you can withdraw funds from your IRA without penalty? If you plan things carefully, you can avoid penalties entirely.

You can take advantage of Roth IRA conversions from your traditional IRA to access your funds as early as you want. The only catch is that you still have to wait five years following your conversion to make the withdrawal.

For example, you can convert $25,000 from your traditional IRA to a Roth IRA this year, 2021. You'll pay regular income tax on your withdrawal, but those taxes can be minimal with proper planning. You can withdraw that $25,000 anytime in 2026 without penalty (even if it's been slightly less than five years). If you make these conversions every year -- called a Roth IRA conversion ladder -- you'll have a steady stream of withdrawable funds starting in five years.

3. The Roth IRA emergency fund

If you're struggling to max out your Roth IRA because you're also saving for an emergency fund, you can keep your emergency fund in your Roth IRA. The advantage of the Roth IRA is that you can withdraw your contributions at any time without penalty. But if you don't max out your contribution limit before the deadline each year, you lose that capacity. There's nothing stopping you from keeping a cash emergency fund in your Roth IRA.

Keeping your emergency fund in a Roth IRA has the advantage of making it just slightly more difficult to access your cash. Additionally, if you withdraw a contribution, you won't be able to put it back into your Roth account. Those factors will make you take the extra consideration necessary before determining whether you really have a need for your emergency funds. By all means, use your emergency fund when you need to, but an emergency fund is not an "Oops, I spent too much this month" fund.

4. Max out your Roth IRA with the mega backdoor

If you're a high earner or just a super saver and your employer's 401(k) allows additional contributions above the $19,500 tax-deductible limit, you may be able to perform the mega backdoor Roth IRA.

The total contribution limit for 401(k) accounts in 2021 is $58,000, or $63,500 if you're 50 or older. That includes your tax-advantaged contribution, the employer match, and any non-deductible contributions you make on top of that.

If your employer plan allows in-service withdrawals, you can roll over those after-tax contributions into your Roth IRA the same year you make them. That means you can potentially add tens of thousands of dollars to your Roth IRA every year.

Take advantage of everything an IRA has to offer

An IRA is one of the most versatile retirement savings accounts. The benefits of tax-advantaged savings and tax-free growth have been covered by many. I hope you can use one or two of these tips to take your retirement planning and savings to the next level.