Broker Check

Your First Roth IRA

August 02, 2022
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I know that you have noticed more businesses are hiring now. As we come out of the pandemic and hopefully get back to more normal lives, I wanted to highlight an option for new employees. This is especially true for people starting with their first job earnings.

 

I am talking about Roth IRAs. Roth IRAs are a great tool to help young people get started on their path to financial independence. Roth IRAs are a way to build wealth with tax free growth potential and tax free distributions in the future.

 

Anyone who has earned income can open a Roth IRA if they meet the following criteria.

  • Single with Adjusted Gross Income limit of $129,000-$144,000
  • Married with Adjusted Gross Income limit of $204,000-$214,000
  • You can contribute up to a max of $6,000 with $1,000 addition catch up if you are over 50 years old.

 

Most first-time wage earnings are well within the income limit. However, they are only allowed to contribute up to the amount of what they earned.

  • Example: If someone earns $2,500 during summer work, then they can only contribute up to $2,500, not $6,000.

 

I would recommend anyone who has income and can quality, should have a Roth IRA. Especially young adults who are just starting out.

 

If you know someone who is just starting to earn wages, call us for some strategies in opening a Roth IRA for them.

 

It is never too early to start on the road to financial independence.


Contributions to a Roth IRA are subject to the income limitations referenced in the article. You may take nontaxable withdrawals from a Roth IRA if you are at least 59 ½ and the account has been held at least 5 years. Otherwise, earnings withdrawn may be subject to ordinary income tax and a 10% penalty.

 

Stephen Moss is a Registered Representative offering Securities through UNITED PLANNERS FINANCIAL SERVICES, Member FINRA/SIPC.  Advisory Services are offered through Pegasus Financial Group.  Pegasus Financial Group and United Planners are not affiliated.

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