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Make this go farther in retirement with these three ways to maximize your Roth IRA. Image source: Pixabay. 

The Roth IRA is an amazing way to create tax-free retirement savings, and it's something that, frankly, too few people take advantage of. Since it's our mission to help people invest better, we asked three of our top retirement planning contributors to discuss smart ways you can maximize your Roth IRA. Depending on your situation, there's a good chance that one of their suggestions would work for you. 

Here's what they had to say.

Roth conversions for high-income earners
Dan Caplinger: Contributing to a Roth IRA is an obvious way to make use of the tax-free retirement account. But the way that many investors have gotten much larger sums of money into their Roth accounts is by doing Roth conversions.

The Roth conversion involves a trade-off: You have to pay taxes on the amount you convert now, but in exchange, you don't have to pay tax when you make withdrawals in retirement. In effect, you lock in your tax liability now, rather than leaving yourself open to whatever changes in the tax laws might happen between now and when you need your retirement money.

Thanks to a law change in 2010, Roth conversions are now available regardless of how much income you have. For high-income taxpayers, that can make a conversion the only way to get money into a Roth-style account.

The best candidates for Roth conversions, however, are those who are currently in low tax brackets. By taking advantage of times in your career when your tax rates are temporarily low, doing a Roth conversion can save you in total taxes paid over your lifetime, and that can leave you with more money to grow tax-free toward a more prosperous and financially secure retirement.

Great place for your best growth ideas
Selena Maranjian: One smart way to make the most of your Roth IRA is to be mindful of which investments you keep in it. Remember that money contributed to a Roth IRA gets to grow on a tax-free basis -- and if you play by the rules, it can all be withdrawn in retirement tax-free. That's a big deal.

You can aim to make it an even bigger deal by doing some or all of your more aggressive investing in your Roth IRA. I'm not suggesting that you invest in anything that seems very risky to you, but if you're interested in a handful of stocks and one or two in particular seem likely to be the fastest growers, you might invest in them through your Roth. Even some seemingly sleepy companies can be terrific performers, if you buy them when they're undervalued and hang on for the long run.

Imagine, for example, plunking $5,000 in a stock that grows by 15%, on average, over 20 years. That position would end up worth close to $82,000, and the entire profit of nearly $77,000 would be tax-free. In contrast, if you'd invested in that stock in a traditional IRA and you were in the 25% tax bracket, you might have found yourself forking over more than $19,000 to Uncle Sam. When you're living on a fixed income, that $19,000 will seem especially valuable.

Start contributions as soon as you can, even if it's a small amount
Jason Hall: When I think of maximizing a Roth IRA, I think of getting the biggest bang for every buck that gets put into it. And the most effective way to do that is simple: Put as much into your Roth IRA as you can, as soon as you can. 

To start, when you're young your income tends to be lower, meaning you fall in a lower tax bracket. The idea with Roth contributions is that you lock in your tax rate the year you make contributions, since you cannot deduct Roth IRA contributions from your income like you can with 401(k) and sometimes traditional IRA contributions, which are then taxed when you take distributions. 

Second, and maybe more important, is how valuable even small contributions are, the longer they have to grow. 

For example, if you contributed the max $5,500 to a Roth IRA at age 30, it would be worth nearly $24,000 based on historical stock market returns, when you reached 45. In other words, you'd have to come up with $24,000 at age 45 if you wanted to reach the same level of savings when you retired, not just the original $5,500 you contributed at 30. That's the power of compounding returns. 

Forgive me for repeating myself, but I'm going to do it anyway: Put as much into your Roth IRA as you can, as soon as you can. Even if you can't max it out -- heck, even if it's only a few hundred bucks or a couple thousand each year -- put in what you can, early. It's time that makes the biggest difference. 

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