Can I Contribute To My Roth IRA?

March 28, 2024 | January Smith IV

One of my favorite account types, largely because of its flexibility and tax status, is the Roth IRA. Now, with Tax Day just around the corner, it is important to remember that you actually have until April 15 of this year, 2024, to make contributions for last year, 2023. This holds true for those over achievers out there that have already filed your income tax return for 2023. For the rest of us, April 15 is just over 2 weeks away.

Eligibility Considerations

Unfortunately, eligibility to contribute to a Roth IRA is subject to restrictions, which can cause confusion. In an effort to make this analysis easier, I have created the “Can I Contribute To My Roth IRA?” flowchart. As you walk through this chart, you will see the key eligibility considerations, including Earned Income, Other (traditional) IRA contributions, and filing status- based modified adjusted gross income, or (MAGI) thresholds.

One feature of Roth IRA eligibility that is difficult to keep track of is income threshold. To address this, you will find two flow charts at the end of this video, or on my new blog. One for 2023 and one for 2024. Now, if you read through these flowcharts and realize that you have made contributions to a Roth IRA, but were above the MAGI threshold, we will need to take action to address what would be considered excess contributions and is liable to be penalized by the IRS. Many people fall into this position, often times because they didn’t know what their MAGI would be by year end, and the custodian where you make the contribution has no way of knowing either, so they will always allow the inflow.

For those above the income limit, there’s no reason to feel left out. There are still ample opportunities to save in a tax advantaged manner. The strategies are many, but are often times more complicated, with a number of pitfalls to keep an eye out for. A couple of them alluded to online are the “Back Door Roth Conversion”, “Mega-Back Door Rother Conversion”, and a growing number of insurance products. While each of these strategies and products have their time and place, caution is warranted when trying to fit them into your unique picture. 

I'm Here to Help

The Roth IRA can be an incredibly power vehicle for tax-free growth, and often times serves multiple purposes beyond retirement for clients that I work with. If you have any questions about Roth IRAs or your larger financial picture, please don’t hesitate to reach out with questions. I would love the opportunity to learn more about and your goals, and see how I may be able to help.

The Flow Chart - 2023

Can I Contribute To My Roth IRA 2023.pdf

The Flow Chart - 2024

Can I Contribute To My Roth IRA 2024.pdf