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Financial Communicator

A Road to Roths

Imagine! Your children are grown. Your career is behind you. You are spending your time with your grandchildren, serving your church or local charities, donating and being generous with the money you have, and intending to leave a financial legacy for your next of kin. You are enjoying this retirement reality with a little help from your Roth IRA, which has tax-free distributions and no required minimum distributions (RMDs). You can avoid worrying about increasing tax rates and exhausting your money too early.

However, what could be lying between you and this future life is your income right now. If your modified adjusted gross income for 2022 is $214,000 or more (married filing jointly), you may not be eligible for a Roth IRA at all. You would have to stick with mostly pre-tax options that have RMDs rather than the after-tax, RMD-free Roths.

Or maybe, what is lying between you and this future life is most of your money is already inside of a pre-tax account like a traditional IRA. Maybe, you were not introduced to Roth IRAs until later in your career, or Roth IRAs, created in 1997, simply did not exist for sizable portion of your working years. Even if you have started contributing to a Roth and are within the income limits, you still have this pool of money inside a future-RMDing, pre-tax account.

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