The Cash Flow Clock: For Retirees - Book - Page 65
The Cash Flow Clock
donate up to $105,000 per year per person (as of
2024).
Roth Contributions and Conversions
Based on our understanding of tax buckets, it is easy
to see why we would prefer to have as many of our
assets as possible in Roth accounts. There are two
ways to get money into Roth:
Contributions – In order to contribute to a qualified
account (Traditional or Roth), we must have earned
income (W2 or 1099 self-employment income
reported on a schedule C). For IRAs (Individual
Retirement Accounts), the maximum contribution is
$7,000 per year (for 2024) with a catch up of $1,000
if you are over 50. Other employer sponsored plans
(401k, 401a, 403b, 457, etc.) have a higher limit
($23,000) and catch up ($7,500). These limits are the
same for either traditional or Roth.
If we make too much money (according to the
government), we may not be able to contribute to a
Roth IRA. But we can still convert tax deferred
assets into Roth no matter how much income we
have.
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