If you dropped the ball on Roth IRA contributions in 2023, don't beat yourself up. 2023 is gone, but you still have a few weeks left to contribute to a Roth IRA for the prior year. You have until the tax filing deadline, which is April 15, 2024, to set aside money in a Roth IRA and have it count as a 2023 contribution.
You may have to make some sacrifices over the next few weeks, but having the chance to live the retirement of your dreams makes it all worth it. Here are a few tips to help you make the most of your 2023 Roth IRA before your window of opportunity expires.
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Review the Roth IRA qualifications for 2023
The Roth IRA (individual retirement account) gets a ton of praise for its tax-free benefits during retirement. But if you don't meet the income requirements to contribute, you might have to jump through a few hoops to funnel your cash into the account.
If you're a single filer and your modified adjusted gross income (MAGI) is less than $138,000, you can contribute the full amount to a Roth IRA for 2023. Married filers can have a MAGI up to $218,000 before they lose the opportunity to contribute the maximum amount to the account. If your income exceeds those numbers, your Roth IRA contribution limit will be reduced or eliminated.
Below are the numbers you need to pay attention to for tax year 2023 to determine if you can make direct contributions to a Roth IRA.
|
2023 Tax Filing Status |
Income Limit for a Full ROTH IRA Contribution |
ROTH IRA 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.
Make the most of the days ahead
If you have earned income and your earned income doesn't exceed the limits, you can work toward your Roth IRA contribution goals before the deadline.
For 2023, the maximum contribution you can make to a Roth IRA is $6,500 if you are under the age of 50. The limit rises to $7,500 if you are 50 and older. You're not required to contribute the maximum amount to a Roth IRA every year. However, the more money you're able to stash away, the more money you'll be able to invest.
Let's say you want to contribute $2,000 to a Roth IRA over the next four weeks. If you haven't opened an account yet, you want to first look into the best Roth IRA accounts to house your money. Then, set up weekly transfers from your checking account to your Roth IRA. If you contribute $500 to a Roth IRA every week, you can reach your 2023 Roth IRA goal in four weeks.
Don't contribute to a Roth IRA before doing this
Contributing to a Roth IRA can lead to sweet benefits during retirement, but you want to make sure you check the box on other goals before you dump money into a Roth IRA.
For starters, check on your emergency fund. Ideally, you want to have at least three to six months' worth of cash tucked away in a high-yield savings account that you can easily access. This will decrease the likelihood of you dipping into your Roth IRA if an emergency pops up.
It also doesn't hurt to revisit your retirement goals. A Roth IRA offers many perks, but that doesn't mean it's the best account for you to contribute to right now. For example, your contributions to a traditional IRA may be tax-deductible if you qualify. But you'll have to wait until you retire to enjoy the full tax benefits of a Roth IRA. However, if you expect to be in a higher tax bracket during retirement, it makes sense to get your tax bill out the way now by contributing to a Roth IRA.
Since the deadline to contribute to a Roth IRA for 2023 is rapidly approaching, you want to determine your next move quickly. If you decide to contribute to a Roth IRA for 2023, you'll have some money in your account to start investing in your favorite assets. And the more time you have in the market, the greater the chance you have of living the retirement you've always dreamed of.
