It’s March 2024 and we’re heading into everyone’s favorite time of year… tax season! In all this excitement, you might consider contributing to a Roth IRA. Roth IRAs are one of the most common sources of tax-free income in retirement and eligible contributions can still be made for 2023 until the earlier of the date you file your taxes, or April 15, 2024.
For 2023 (subject to income limitations), you may be able to contribute up to $6,500 ($7,500 if you’re over age 50). Even if you are over the income limits, you still may be able to make a backdoor Roth IRA contribution (also referred to as a Roth conversion). Importantly, once you’ve made a Roth IRA contribution, in order to take full advantage of the tax-free growth opportunity, the money should be invested.
The process, tax implications, and filing requirements for a Roth conversion can be complicated (especially when making contributions for the prior calendar year). If you are working with an accountant, you might inquire whether a Roth IRA contribution or conversion makes sense for your specific tax situation.
In addition to Roth IRA contributions, you may still be able to make other types of contributions for 2023 (for example, 529 contributions for college savings plans). If you’d like to discuss potential 2023 contributions that might make sense for your tax situation, please feel free to reach out.
Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.