Click here to learn more on whether a Roth or Traditional retirement account is right for you.
In my first post on why you should save for retirement now, I had an awesome question from Flo, a close friend. The question was concerning Roth IRA limitations. Generally, if you make over a certain amount, you do not qualify to deposit money in a Roth IRA. Here’s the limit for 2016 according to the IRS.
In any case, here are two potential ways to get around this restriction.
#1. Maximize your traditional IRA contributions, and then you can rollover your traditional IRA to a Roth IRA. Be aware that you will have to pay taxes on this conversion, and you will have to fill out a Form 8606 according to the IRS. You can read more specifically here (It’s long). Generally, financial firms will make it easy for you to rollover / convert your traditional IRAs to a Roth IRAs, you just have to be aware of what your tax bill will be.
#2. There’s no income limitation to a Roth 401(k) according to the IRS, so if you have this option feel free to max this out! Woot!
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