How can Roth IRA contributions raise your retirement savings?

[Holicent]

It's a simple concept: you can reduce your tax liability now, and then pay the taxes on that money after you retire. That way, you'll be able to save more money for retirement. It's called a Roth IRA, and it allows people to make after-tax contributions to their retirement savings accounts. You can contribute up to $5,500 ($6,500 if you're 50 or older) per year in 2018.

How it works:

If you're contributing to a traditional IRA or 401(k) plan at work, you can also contribute the same amount directly into your Roth account. If you are eligible for the full $6,500 per year per person (age 50 or older), then this is an even better option because it will allow you to save even more money for retirement.

You won't have to pay tax on any Roth IRA contributions when they are made or withdrawn in the future. The IRS allows this because all earnings within the account grow tax-free until they are withdrawn as income in retirement — at which point they become taxable again.

 

[Jasz]

The basics of how Roth IRAs work is that they offer tax-free growth, which means that you can invest your money in a Roth IRA and never pay taxes on it. In fact, if you're already making a lot of money and have the ability to contribute a lot of money to your retirement savings, then the Roth IRA may be the best option for you.

The basic idea behind the Roth IRA is that you make contributions from your current income as long as you meet certain requirements. You can't contribute more than $5,500 per year until you reach age 50 (or $6,500 if you're 50 or older). This is because no matter what your income is at the time you make your first contribution, it will be considered an early withdrawal penalty. However, there's no income limit on contributions once you've met these requirements. Once you hit age 59 1/2, however, you'll need to start withdrawing funds from your account in order to avoid taxes and penalties on any earnings above $1 million.