Many individuals who are saving for retirement favor Roth IRAs over traditional IRAs because the former allows for both accumulation of account earnings and post-retirement distributions to be tax-free. In comparison, contributions to traditional IRAs may be deductible, earnings are tax-deferred, and distributions are generally taxable. Anyone who has compensation can contribute to a traditional IRA (although the deduction may be limited). However, not everyone is allowed to make a Roth IRA contribution.

High-income taxpayers are limited in the annual amount they can contribute to a Roth IRA. The maximum contribution for 2023 is $6,500 ($7,500 if age 50 or older). The allowable 2023 contribution for joint-filing taxpayers phases out at an adjusted gross income (AGI) between $218,000 and $228,000 (or an AGI between $0 and $9,999 for married taxpayers filing separately). For unmarried taxpayers, the phase-out is between $138,000 and $153,000.

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William G. Lako, Jr., CFP®, is a principal at Henssler Financial and a co-host on “Money Talks”—your trusted resource for your money, your future, your life—airing Saturdays at 10 a.m. on AM 920 The Answer. Mr. Lako is a CERTIFIED FINANCIAL PLANNER™ professional.

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