November 05, 2017

2018 Roth IRA Contribution and Income Limits

BOTTOM LINE — The maximum contribution to a Roth IRA is unchanged from 2017. The income limit however has gone up a few thousand dollars across filing types.

In late October, the IRS published the Roth IRA rules for 2018. Here’s what you can expect for the upcoming tax year:

Maximum contribution limit

If you are eligible based on your income, you can contribute:

  • $5,500 if you are under 50 years old
  • $6,500 if you are...
October 22, 2017

E*TRADE Roth IRA — The Complete Review

BOTTOMLINE — E*TRADE offers competitive features and fees for Roth IRA accounts.

Our readers have requested reviews of popular Roth IRA providers. We reviewed the USAA Roth IRA. We want to look now at E*TRADE, another popular provider.

E*TRADE — like many brokerages — offers Roth IRA accounts. If you don't have a Roth IRA account, consider getting one. It is a powerful way to save for retirement. Roth IRAs allow you to sock away after-tax money in an account to grow tax-free and to be withdrawn tax-free (once you meet...

October 08, 2017

USAA Roth IRA — Everything you need to know

BOTTOM LINE — USAA is a solid provider for Roth IRA accounts, but beware higher fees compared to other providers, especially if you expect to make frequent changes.

USAA offers Roth IRA accounts. A Roth IRA is a retirement savings account allowing you to put taxed money into the account to grow tax-free and to be withdrawn tax-free once you meet requirements. We’re written extensively on the benefits of a Roth and encourage all our readers serious about saving for retirement to take...

September 30, 2017

Can you have more than one Roth IRA? Should you?

Bottom line: Yes, you can have more than one Roth IRA account. However, the annual contribution of $5,500 or $6,500 if you’re 50 years or older still applies across all accounts.

You can have more than one Roth IRA account. Some find the benefits appealing. However, there are some downsides to be aware of which we’ll go over.

The IRA, or Individual Retirement Account, is also called an Individual Retirement Arrangement. The arrangement term is key and helps us think less of a single account and more of a privilege. This privilege gives you the ability to...

September 21, 2017

Complete Guide to Your Roth IRA Basis

BOTTOM LINE - Your Roth IRA tax basis is the sum of your after-tax money you’ve contributed to your Roth IRA not yet withdrawn.

Disclosure: You may have Googled this page after encountering line 22 in Form 8606, or questioned on accounting software like Turbo Tax. We’ll attempt to help you but if you have a complicated tax situation, it’s always good to consult a tax advisor or accountant.

A Roth IRA basis is the portion of your account not subject to taxes when you withdraw.

It’s a good thing. It’s your friend, and it’s important to track. Because if you don’t, it’s possible to pay taxes twice!

Roth IRA basis

Let’s back up and cover the...

September 17, 2017

Roth 401(k) vs Roth IRA: What’s the difference and which one should you have?

Bottom line: Have both for maximum retirement savings of $23,500, or choose the Roth 401(k) if you have to select one.

You’re planning for retirement. That’s good. In fact, you are among only a third of Americans who are, which is decidedly too low. So pat yourself on the back for doing this research.

We’re going to cover the differences between a Roth 401(k) and a Roth IRA and which you should have. Spoiler alert: it’s...

September 11, 2017

What is an IRA? And why should you have one?

An Individual Retirement Account (IRA) is a broad category of retirement accounts providing significant tax savings. IRAs are important assets for building wealth and shielding away taxes. If you are eligible, you should be taking advantage of the benefits of an IRA account.

An IRA is less account and more collection of investments. They are provided by many financial institutions (Vanguard, Fidelity, Schwab) and funded by securities like stocks, bonds, and mutual funds.

Some IRAs such as a Traditional IRA or a Roth IRA can be opened by individuals.

Employers can provide IRA accounts...

September 10, 2017

2017 Roth IRA Rules

We’ve written extensively about the benefits of a Roth IRA. There are however rules which govern eligibility and contribution limits. These rules can change year-to-year and are controlled by the IRS.

We outline the 2017 Roth IRA rules here.

2017 Roth IRA Income Limits

Your income limit determines the amount you can contribute to your Roth IRA each tax year. There are two factors which the IRS uses to determine this limit: your marital status and your income (more specifically your modified adjusted gross income or modified AGI).

If you are single, head of household, or married filing separately (did not live with spouse during tax year), you...

August 26, 2017

Backdoor Roth IRA: Ultimate Fidelity Step by Step Guide

Hello, friends. We’re going to cover the Backdoor Roth IRA and why you should consider it.

I recently went through the process of doing a Backdoor Roth IRA using Fidelity. There are plenty of useful guides on the web already — many of which I’ll link to — but I didn’t find a guide for the layman.

I intend this to be that guide. I’ll walk you through what a Roth IRA is, what the Backdoor method is, how it’s done using Fidelity as a platform, and some tax considerations to look out for.

This guide is likely useful for the novice or intermediate investor. For folks looking for more detailed guidance, check out others on the web. Let me also state this guide is merely a suggestion. Make sure to consult your tax advisor or lawyer if you are unsure of your financial situation.

With that said, let’s dive in.

What is a Roth...