A Roth IRA is a type of retirement account that has several advantages over traditional IRAs. For example, you can contribute more money each year to a Roth IRA and there are no income limits to qualify for the maximum contribution. Additionally, Roth IRAs have no required minimum distribution at retirement, so you can leave your Roth IRA to heirs without being taxed on the balance as long as they are over the age of 59 ½. However, there are some disadvantages to Roth IRAs as well. For example, Roth IRAs have a lower contribution limit of $5,500 per year compared to $18,000 for a traditional IRA. However, the good news is that you can combine both types of IRAs to get the most out of both accounts. The following article will explain how much you can contribute to a Roth IRA for 2018 and the pros and cons of each type of IRA.

What is a Roth IRA?

A Roth IRA is a type of retirement account that has several advantages over traditional IRAs. For example, you can contribute more money each year to a Roth IRA and there are no income limits to qualify for the maximum contribution. Additionally, Roth IRAs have no required minimum distribution at retirement, so you can leave your Roth IRA to heirs without being taxed on the balance as long as they are over the age of 59 ½. However, there are some disadvantages to Roth IRAs as well. For example, Roth IRAs have a lower contribution limit of $5,500 per year compared to $18,000 for a traditional IRA. The good news is that you can combine both types of IRAs to get the most out of both accounts. The following article will explain how much you can contribute to a Roth IRA for 2018 and the pros and cons of each type of IRA.

How much can I contribute to a Roth IRA?

The amount you can contribute to a Roth IRA each year varies depending on your age. The maximum annual contribution to a Roth IRA is $5,500 for people under 50. The maximum contribution increases to $6,000 for people 50 or older. Keep in mind that the maximum contribution is per year, so if you contribute $5,500 this year and $5,500 again next year, you will have contributed $11,000 for the year. If you don’t have enough money to contribute this much, you can always contribute a smaller amount and then increase the amount as your income increases.

How to calculate the maximum Roth IRA contribution

To figure out how much you can contribute to a Roth IRA for the year, take your current age and multiply it by 12. This will give you the number of years until your next birthday. Then, take that number and add it to your current income to get your maximum Roth IRA contribution. For example, if you are 35 years old and have a gross income of $50,000, then your maximum Roth IRA contribution is $5,500. If you are 55 years old and have a gross income of $50,000, then your maximum Roth IRA contribution is $6,000.

How to calculate the maximum traditional IRA contribution

The amount you can contribute to a traditional IRA each year also varies depending on your age. The maximum annual contribution to a traditional IRA is $6,000 for people under 50. The maximum contribution increases to $6,500 for people 50 or older. To calculate the maximum traditional IRA contribution, take your current age and multiply it by 12. Then, take that number and add it to your current income to get your maximum Roth IRA contribution. For example, if you are 35 years old and have a gross income of $50,000, then your maximum Roth IRA contribution is $5,500. If you are 55 years old and have a gross income of $50,000, then your maximum Roth IRA contribution is $6,500.

Pros of a Roth IRA

There are several benefits to contributing to a Roth IRA. First, you can contribute more money to a Roth IRA than a traditional IRA. Second, Roth IRAs have no required minimum distribution at retirement, so you can leave your Roth IRA to heirs without being taxed on the balance as long as they are over the age of 59 ½. Third, Roth IRAs are not subject to income limitations, so you can contribute the maximum amount based on your income.

Cons of a Roth IRA

There are some disadvantages to contributing to a Roth IRA. First, you can only contribute to a Roth IRA for a limited number of years. Second, you cannot contribute the same amount to a Roth IRA and a traditional IRA in the same year. Third, Roth IRAs have no maximum contribution limit.

Final thoughts

If you are in a higher tax bracket now, a Roth IRA is the better choice. However, if you are in a lower tax bracket now, a traditional IRA may be the better choice. If you expect your income to increase significantly in the future, it may make more sense to contribute to a traditional IRA and then convert it to a Roth IRA when you qualify. The amount you can contribute to a Roth IRA each year varies depending on your age. The maximum annual contribution to a Roth IRA is $5,500 for people under 50. The maximum contribution increases to $6,000 for people 50 or older.