3 Roth IRA Perks You Don't Want to Miss in 2024

Roth IRAs are one of the most coveted accounts on the retirement scene for several reasons. For starters, you contribute after-tax dollars to the account so that you can enjoy tax-free income during retirement. Since you're not required to withdraw money from the account during your lifetime, the money can keep growing, and you can pass it on to your heirs.

But you'll want to jump on the benefits of a Roth IRA as soon as possible. Once your income jumps over the threshold, you won't be able to make direct contributions to the account. So if you're ready to unlock the power of a Roth IRA, here are three perks you don't want to miss in 2024.

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1. Take advantage of the highest contribution limits ever

If you qualify to make direct contributions to a Roth IRA in 2024, you'll be able to take advantage of the biggest contribution limits we've ever seen. This year, you can funnel up to $7,000 into a Roth IRA, provided your income sits below the threshold. And if you're 50 or older, you can stash away as much as $8,000 as long as you plan to earn at least that much this year. These contribution limits jumped $500 over the cap for 2023.

Let's say you qualified to contribute $8,000 every year. Within 13 years, you would be able to build a six-figure portfolio. Most likely, you'll be able to hit six figures much faster if you invest in assets that generate superior returns. The more money you contribute to a Roth IRA, the more money you'll have available to invest.

2. Invest in your favorite assets

If you're working full-time, your employer probably offers some type of retirement plan, like a 401(k). For 2024, you can contribute up to $23,000 to the account, and your employer might even chip in a 401(k) match. But your 401(k) investment options are typically limited to a few investments, like index funds and target date funds.

Your Roth IRA offers more flexibility and freedom. You own and manage the account, so you'll be able to decide what investments you can add to your portfolio. You could pump up your Roth IRA with a wide variety of traditional assets, including:

• Growth stocks
• Dividend-paying stocks
• Exchange-traded funds

You could even look into a self-directed Roth IRA and gain access to more exotic assets, such as real estate, businesses, and digital currencies, that can supersize your returns. But you'll want to make sure you understand the risks associated with these investments before you dive in.

3. Snag a Saver's Credit

Contributions to a Roth IRA won't lead to an up-front tax deduction, since they are made with after-tax dollars. But you may be eligible for a Saver's Credit if your income isn't too high. The IRS rewards low-and-moderate income retirement savers with a credit worth up to $2,000 ($1,000 if filing single) for making contributions to a qualified retirement account like a Roth IRA. Keep in mind that the Saver's Credit is nonrefundable, so you won't end up with a tax refund if your credit exceeds your tax bill.

This table shows whether you're in the running for the Saver's Credit. Your credit may be worth 10%, 20%, or 50% of your eligible retirement contributions, depending on your adjusted gross income and filing status.

Data source: IRS.

If you qualify to make contributions to a Roth IRA and it makes sense for your portfolio, you want to do your research now so you can start taking advantage of the benefits. You may qualify for benefits right now, such as the Saver's Credit, or position yourself to get more tax-free income during retirement.