Turn Your Roth IRA Into a Super-Roth
Roth IRAs can be wonderful savings instruments for people looking for tax-free growth potential. But because a Roth IRA is (of course) an IRA, that means you’re stuck with the relatively low IRA contribution limits of $6,000 (or $7,000 if you’re at least age 50). A 401(k) plan, though, has much higher contribution limits at $19,000 (or $25,000 age 50+). Further, some employers also allow for after-tax contributions to their 401(k) plan, meaning that you could potentially contribute up to $62,000 to your company retirement plan, depending on your age and some other factors. These higher deferral limits may offer you the rare opportunity to eventually roll all of your post-tax money from your 401(k) into your Roth IRA – WITHOUT having to do so on a pre-tax/post-tax pro-rata basis.