{"id":108884,"date":"2023-09-15T12:34:19","date_gmt":"2023-09-15T16:34:19","guid":{"rendered":"https:\/\/tjbdeals.com\/?p=108884"},"modified":"2023-09-15T14:10:52","modified_gmt":"2023-09-15T18:10:52","slug":"everything-you-need-to-know-about-roth-ira-and-the-investment-required-to-make-you-a-tax-free-millionaire","status":"publish","type":"post","link":"https:\/\/tjbdeals.com\/?p=108884","title":{"rendered":"Everything You Need To Know About Roth IRA and The Investment Required To Make You A Tax Free Millionaire"},"content":{"rendered":"<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Roth IRA&#8217;s can make you a tax-free millionaire. But only 6.6% of Americans own one. Here&#8217;s everything you need to know about the Roth IRA:<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>What&#8217;s a Roth IRA<\/strong>? A Roth IRA is an &#8220;Individual Retirement Account.&#8221; Unlike a 401(k) where your employer provides it for you, you must open this account yourself. My favorite brokers to open a Roth IRA with are: <\/span><\/p>\n<ul>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Fidelity<\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Vanguard<\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Charles Schwab<\/span><\/li>\n<\/ul>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>How does a Roth IRA work?<\/strong> You contribute money you already paid taxes on. Then you invest the money you contributed. A common misconception is that the Roth IRA is an investment. Not true. It&#8217;s the account. And you buy investments WITHIN the account.<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>What makes the Roth IRA special?<\/strong> Two things. Tax-free growth &amp; Tax-free withdrawals. You can buy and sell stocks in a Roth IRA as you please without getting taxed. And you can withdraw the money you made without paying taxes as well. <\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Roth IRA Rules:<\/strong> <\/span><\/p>\n<ol>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">There are income limits for high earners <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Tax-free withdrawals occur after age 59 1\/2 <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Annual contribution limit of $6,500 (in 2023) <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">The account must have been open for 5+ years <\/span><\/li>\n<\/ol>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Rule 1:<\/strong> Roth IRA Income limits <\/span><\/p>\n<ul>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">2022: Single is $144,000; Married filing jointly is $214,000 <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">2023.: Single is $153,000 Married filing jointly is $228,000 <\/span><\/li>\n<\/ul>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">If you make more than those amounts, you cannot contribute to a Roth IRA at all.<br \/>\n<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Exception:<\/strong> Backdoor Roth IRA &#8211; When you contribute to a Traditional IRA then convert the money to a Roth IRA. <\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Rule 2:<\/strong> Tax-Free withdrawals &#8211; You can&#8217;t withdraw gains tax-free until age 59 1\/2. If you withdraw gains before age 59 1\/2 you will incur penalties. But you can withdraw CONTRIBUTIONS without any penalty or taxes.<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Exception:<\/strong> You can avoid penalties (not taxes) if you withdraw for the following reasons: <\/span><\/p>\n<ol>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Disability\/death <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Education expenses <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Birth\/Adoption expenses <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Health insurance if unemployed <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">Unreimbursed medical expenses <\/span><\/li>\n<li><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\">First-time home purchase ($10k max)<\/span><\/li>\n<\/ol>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Rule 3:<\/strong> Annual Contribution Limit &#8211; Contribution limits for 2022 are $6,000\/year. For 2023 it&#8217;s $6,500\/year. But if you&#8217;re age 50 or over, you are allowed to contribute more money to a Roth IRA than the average person. For 2022 you can contribute up to $7,000\/year. For 2023 you can contribute up to $7,500\/year.<br \/>\n<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Rule 4:<\/strong> Account age &#8211; Your Roth IRA must have been opened for at least 5 years before you can withdraw from it without penalty. This is in addition to the age requirement of 59 1\/2 AND includes contributions. But the same exceptions for Rule 2 apply to this one as well.<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>Should you open a Roth IRA?<\/strong> A good rule of thumb is if you expect your tax bracket to be higher in the future then you should open a Roth IRA. This way you pay taxes now (when your bracket is lower) and no taxes later (when your bracket is higher).<\/span><\/p>\n<p><span class=\"css-901oao css-16my406 r-poiln3 r-bcqeeo r-qvutc0\" style=\"font-size: 12pt;\"><strong>How to become a tax-free millionaire:<\/strong> Invest $500\/month in a Roth IRA for 31 years (2022 numbers) or $540\/month in a Roth IRA for 30 years (2023 numbers). That&#8217;s ~$1.1 million dollars tax-free.<\/span><\/p>\n<p><span style=\"font-size: 12pt;\">[Source <a href=\"https:\/\/twitter.com\/Budgetdog_\" target=\"_blank\" rel=\"noopener\"><span style=\"text-decoration: underline; color: #0000ff;\">Brennan Schlagbaum<\/span><\/a> (who is also a great follow on Twitter)]<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"text-decoration: underline; font-size: 12pt;\"><span style=\"color: #ff0000;\"><strong>Don&#8217;t Miss Out Another Deal:<\/strong> <\/span><\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 12pt;\">Follow us on <strong>Whatsapp<\/strong> by <a href=\"https:\/\/wa.me\/message\/O7R4VVIKTBRDN1\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"text-decoration: underline; color: #0000ff;\">clicking here<\/span><\/a><\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 12pt;\">Follow us on <strong>Twitter<\/strong> by <a href=\"https:\/\/twitter.com\/TJBdeals\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"text-decoration: underline; color: #0000ff;\">clicking here<\/span><\/a><\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 12pt;\">Follow us on <strong>Telegram<\/strong> by <a href=\"https:\/\/t.me\/TJBDeals\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"text-decoration: underline; color: #0000ff;\">clicking here<\/span><\/a><\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-size: 12pt;\">You can also get some deals on <strong><a href=\"https:\/\/www.facebook.com\/TJBdeals\/\" target=\"_blank\" rel=\"noopener\"><span style=\"text-decoration: underline; color: #0000ff;\">Facebook<\/span><\/a><\/strong> and <strong><a href=\"https:\/\/www.instagram.com\/tjbdeals\/\" target=\"_blank\" rel=\"noopener\"><span style=\"text-decoration: underline; color: #0000ff;\">Instagram<\/span><\/a><\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<div class=\"mh-excerpt\"><p>Roth IRA&#8217;s can make you a tax-free millionaire. But only 6.6% of Americans own one. Here&#8217;s everything you need to <a class=\"mh-excerpt-more\" href=\"https:\/\/tjbdeals.com\/?p=108884\" title=\"Everything You Need To Know About Roth IRA and The Investment Required To Make You A Tax Free Millionaire\">&#8230;.. Get This Deal<\/a><\/p>\n<\/div>","protected":false},"author":1,"featured_media":108892,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":{"0":"post-108884","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tjb-blog"},"_links":{"self":[{"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/posts\/108884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=108884"}],"version-history":[{"count":1,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/posts\/108884\/revisions"}],"predecessor-version":[{"id":108893,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/posts\/108884\/revisions\/108893"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=\/wp\/v2\/media\/108892"}],"wp:attachment":[{"href":"https:\/\/tjbdeals.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=108884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=108884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tjbdeals.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=108884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}