Photo of Eric R. Ebbert, CFP®, MBA, CEO Eric R. Ebbert, CFP®, MBA, CEO Sep 06, 2021

Thanks to its untaxed growth and withdrawals in retirement, the Roth IRA is a popular individual retirement account option for many Americans. However, the maximum annual contribution for a Roth IRA is $6,000 for those under the age of 50. For those older than 50, the contribution increases just $1,000 to a maximum of $7,000. Furthermore, you may only contribute to a Roth IRA if you earn less than $140,000 annually for those filing taxes as single, or $208,000 if you’re married. 

If you can invest much more than the annual limit, then you are probably wondering about Roth IRA alternatives for high-income individuals. Here are some retirement funds options if you have a high income:

  • Roth 401(k) —Like a Roth IRA, a Roth 401(k) can grow untaxed and you do not have to pay taxes when you withdraw from this fund for retirement. A Roth 401(k) does not place limitations on income, either. However, there is a maximum annual contribution of $19,500 to a Roth 401(k). This grows to a maximum of $26,000 for those over the age of 50. 
  • Backdoor Roth IRA —While a Roth IRA precludes contributions from high-income individuals, a traditional IRA does not. That means you can contribute to a traditional IRA and then convert it to a Roth IRA at a later date. The downside to this option is that you would have to pay taxes on the conversion, but afterward the Roth IRA would grow tax-free. 

Talk to a ProVise CFP® professional about Roth IRA alternatives for high-income earners

At ProVise Management Group, we understand that everybody’s financial situation is different. Our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you to determine the best Roth IRA alternatives if you have a high income. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about Roth IRA alternatives? Contact ProVise today to schedule a complimentary consultation.