So, if you’re a person below those income levels

So, if you’re a person below those income levels – and about 90% of Americans are below that level – you don’t need to worry about a “backdoor” Roth IRA at all. You can just contribute normally without worrying about it. The “backdoor Roth IRA” only matters to people earning above the income cap for a Roth IRA – about 10% of Americans. If you’re not in that 10% group, don’t worry about it at all! You can stop right here and move on to something else, unless you’re just feeding your curiosity.

So, what can the remaining 10% of people do? They have the option oBig Boss vote

Second – and this is the important one

Second – and this is the important one – there’s a maximum income limit for contributing to a Roth IRA. As of tax year 2018, if you’re single, you can only contribute fully to a Roth IRA each year if your income is $120,000 or less (this is found on your income tax as your MAGI, or “modified adjusted gross income,” if you want to figure out the exact number this is judged by). If you’re married filing jointly, your combined income must be $189,000 or less. If you’re married filing separately, it’s even trickier – you can generally only contribute the full amount under special circumstances. There’s a bit of a leeway above those dollar amounts where you can contribute a reduced amount, but even that loophole closes with incomes above $135,000 if you’re single or $199,000 if you’re married and filing jointly.

So, if you put in a bunch of money in your 20s or 30s

So, if you put in a bunch of money in your 20s or 30s and just let it sit there until you’re 65, it’s likely tripled or quadrupled in value and you can withdraw all of it without paying taxes on it. Talk about an efficient way to supplement Social Security!

That’s why a lot of people want to contribute to a Roth IRA – it’s a really great way to save for retirement.

There’s a catch, though – well, two catches. First, you can only contribute $5,500 a year (or $6,500 a year) to your Roth IRA. That’s the cap for now; it is sometimes adjusted upwards by an act of Congress.

Roth IRAs have two really nice features.

Roth IRAs have two really nice features. One, you can withdraw your contributions at any time. If you put $1,000 in there and then decide you want that $1,000 back three years from now, you can take it out with no problems at all. However, you can’t touch the gains without paying taxes and an additional penalty, unless you take advantage of the second benefit, which is that if you’ve had the account for five years and you’re 59 1/2 years old or older, you can withdraw the gains tax free.

You put money into a Roth IRA directly

You put money into a Roth IRA directly from your checking or savings account, just like writing a check or doing a bank transfer. When the money is in that account, you decide how it is to be invested, as most Roth IRAs give you a wide variety of investment options. Most of the time, the money in a Roth IRA is put into an investment that will have nice long-term returns, like stocks. Any returns earned on your money while in a Roth IRA stays in that account until you choose to withdraw it.