ROTH IRAs continue to enjoy broad financial appeal to many Americans. ROTH IRAs are after tax investment accounts that grow tax free, are not subject to Required Minimum Distribution (RMD) calculations when you reach age 73, and distributions after age 59 ½ are also tax free as long as the assets being withdrawn have been held for at least 5 years.
Greetings, Lynn Spencer here with Killingsworth Spencer CPAs. Clients continue to seek ways to further invest in their retirement plans, but ROTH IRA contributions can be complicated for those taxpayers whose income exceeds the stated limits in the chart below.
| Roth IRA Contribution Limits (Tax Year 2025) | ||||
| Single Filers (MAGI) | Married Filing Jointly (MAGI) | Married Filing Separately (MAGI) | Maximum Contribution for individuals under age 50 | Maximum Contribution for individuals age 50 and older |
| under $150,000 | under $236,000 | $0 | $7,000 | $8,000 |
| $151,500 | $237,000 | $1,000 | $6,300 | $7,200 |
| $153,000 | $238,000 | $2,000 | $5,600 | $6,400 |
| $154,500 | $239,000 | $3,000 | $4,900 | $5,600 |
| $156,000 | $240,000 | $4,000 | $4,200 | $4,800 |
| $157,500 | $241,000 | $5,000 | $3,500 | $4,000 |
| $159,000 | $242,000 | $6,000 | $2,800 | $3,200 |
| $160,500 | $243,000 | $7,000 | $2,100 | $2,400 |
| $162,000 | $244,000 | $8,000 | $1,400 | $1,600 |
| $163,500 | $245,000 | $9,000 | $700 | $800 |
| $165,000 & over | $246,000 & over | $10,000 & over | $0 | $0 |
If your income(s) exceed the amounts stated above, there continues to be a way to make a ROTH IRA contribution. It is called a “Backdoor ROTH” conversion, and it is a two-step process. It is highly recommended that you work directly with your CPA and investment professional. You make an after-tax IRA contribution of either $7,000 or $8,000 (depending upon your age) and then advise your investment professional to make a ROTH IRA conversion of your after-tax IRA contribution. Your CPA must file Form 8606 on your behalf each year you make a ROTH conversion.
If you have other pretax IRA retirement accounts, your ROTH IRA conversion becomes a bit more complicated due to the “pro-rata rule.” In these cases, the IRS requires a calculation of the value of after-tax contributions relative to total pre-tax IRA assets. Of course, this may diminish the appeal of a backdoor ROTH conversion, which is why it may be beneficial to also seek the advice of your tax advisor and investment professional.
If you have any questions or would like to learn more about how Killingsworth Spencer CPAs can help you reach your tax goals, give Lynn Spencer a call at 770-552-8286. Or you can visit our website at www.killingsworthspencerllc.com
Disclaimer: This post is for general information only and should not be taken as legal or financial advice.