No Contribution Increase for Roth Ira's for 2020, ugh



Roth IRAs aren't for me. But I guess it depends on your estate plan. I am following my mom's lead. The core consideration she had was getting the maximum tax benefit. Her assumption was she would be in a lower tax bracket retired than working. She wanted the tax break up front, not later. It worked pretty well. She retired at 62, and passed away at 90. She only had taxable income one year of the 28 she was retired. So 27 retired years she was in a zero percent tax bracket, as opposed to 27%ish working. But she only took the minimum required distributions from her IRAs at age 70 1/2.
OP I'd look at other tax free investment options if you have additional money you wish to sock away for retirement.
 
I'm confused. Are you talking about the income limits to be eligible to contribute to a Roth IRA, or the actual limits? Because the actual limits don't change very often.

2019 & 2020, $6000
2013-18, $5500
2008-2012, $5000
This. We have been contributing to Roth IRAs for years and the limits very rarely change. I remember when we first started contributing it was $5000 per year. Now, I think we can put $6500 per year because of our ages.
 
Roth IRAs aren't for me. But I guess it depends on your estate plan. I am following my mom's lead. The core consideration she had was getting the maximum tax benefit. Her assumption was she would be in a lower tax bracket retired than working. She wanted the tax break up front, not later. It worked pretty well. She retired at 62, and passed away at 90. She only had taxable income one year of the 28 she was retired. So 27 retired years she was in a zero percent tax bracket, as opposed to 27%ish working. But she only took the minimum required distributions from her IRAs at age 70 1/2.
OP I'd look at other tax free investment options if you have additional money you wish to sock away for retirement.
Yep, everyone's situation is different. Her assumption does not apply to everyone else. Some people max out their 401k's and go for a Roth after. We rolled DH's 401k into an IRA when he retired and are in the process of converting some of it to a Roth over a period of several years. Our tax rate is pretty low now, I do not expect it to be any lower in the coming years. Plus the RMD's would be huge if he left it all in a traditional IRA, so for us it is better to take a tax hit now before he starts collecting Social Security.
 


This. We have been contributing to Roth IRAs for years and the limits very rarely change. I remember when we first started contributing it was $5000 per year. Now, I think we can put $6500 per year because of our ages.

What also changes is the maximum income to contribute to a Roth. It’s $122k going to $124k next year filing single and $193 to $196 filing married.
 
Oh sorry I was talking about the limit to contribute to an individual Roth IRA only being $6,000. I'd like to see that keep moving up every year.

I feel tax rates are going to have to go way up in the future to service the debt. My DH and I both have pensions plus 401k's and deferred comp, I'm figuring our tax rate will be higher in retirement so we're trying to get as much thrown in our Roths as we can. I've switched my contribution in my 401k all over to Roth 401k but my company just got the Roth and I've been working for 30 years. Same with my DH(contributes b4 tax) he doesn't have a Roth option.
 
Oh sorry I was talking about the limit to contribute to an individual Roth IRA only being $6,000. I'd like to see that keep moving up every year.

I feel tax rates are going to have to go way up in the future to service the debt. My DH and I both have pensions plus 401k's and deferred comp, I'm figuring our tax rate will be higher in retirement so we're trying to get as much thrown in our Roths as we can. I've switched my contribution in my 401k all over to Roth 401k but my company just got the Roth and I've been working for 30 years. Same with my DH(contributes b4 tax) he doesn't have a Roth option.

But you take your chances either way...since tax rates will likely go up in the future, it's just as likely for Roths to be hit with taxes, since it would be the easy grab for politicians. While they say they won't be taxed when you take money out, that's only true til the next tax bill is passed.

So, for investing, I take the motto that I take in all walks of life - everything in moderation. Stay diverse in contributions everywhere, and you'll probably sit just right (ala Goldilocks) at the end.

So, if you have access to pre-tax 401Ks and after tax Roths, do both:)...especially if you're really young, b/c you have the most time for politicians to mess it all up:)...
 
But you take your chances either way...since tax rates will likely go up in the future, it's just as likely for Roths to be hit with taxes, since it would be the easy grab for politicians. While they say they won't be taxed when you take money out, that's only true til the next tax bill is passed.

So, for investing, I take the motto that I take in all walks of life - everything in moderation. Stay diverse in contributions everywhere, and you'll probably sit just right (ala Goldilocks) at the end.

So, if you have access to pre-tax 401Ks and after tax Roths, do both:)...especially if you're really young, b/c you have the most time for politicians to mess it all up:)...
Yup. Sort of like what Congress did with traditional IRAs. I have paper work somewhere from about 1979 talking about being able to withdraw money without penalty to buy a house, pay kids college tuition, pay medical bills. That all changed in the 1980's because too many people were stashing too much money away tax free.
 
Everyone should maximize every retirement option you have. Whether 401k, Roth IRA or standard IRA. Maximize every contribution and option you have. You can never save too much.
 
Everyone should maximize every retirement option you have. Whether 401k, Roth IRA or standard IRA. Maximize every contribution and option you have. You can never save too much.

It’s also important to find out if there is a consequence for how early you max out if you choose/have the means to max.

Example...federal employees can contribute $19k to their Roth TSP. The government gives an automatic 1% and then an additional 4% matching. There are 26 pay periods. If you max out in pay period 22 then you will not get your matching funds for pay periods 23-26 since you will no longer be allowed to contribute.
 
Everyone should maximize every retirement option you have. Whether 401k, Roth IRA or standard IRA. Maximize every contribution and option you have. You can never save too much.

No way. I would rather take multiple trips to Disneyland and a cruise every year. Sure I could save more but why? Saving 20% is enough. I would rather the spend the rest than save it. You never know when your last day may come. My goal is to die broke.
 
it's just as likely for Roths to be hit with taxes, since it would be the easy grab for politicians. While they say they won't be taxed when you take money out, that's only true til the next tax bill is passed.

I absolutely agree about saving in multiple vehicles, but I actually think Roth IRAs are fairly safe from tax plundering.

You know who contributes to political campaigns and votes without fail??? Old people with money.
 
No way. I would rather take multiple trips to Disneyland and a cruise every year. Sure I could save more but why? Saving 20% is enough. I would rather the spend the rest than save it. You never know when your last day may come. My goal is to die broke.
LOL. My Financial Planner and CPA use different Estate Planning software. But one thing those pieces of software have in common, the DEFAULT number for amount of money you want to leave your heirs is $1 million !!!!
 

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