Im quite confused here. I see max contribution for it is 5k for both 2024 and 2025, so max i can put this year will be 10k. Next year it will only be 5k. What the heck can you do with 5k a year? I mean my weekly drops will not go through so I will just have to be looking at the stocks and sell ( sell or underperforming ones ) to buy stable or new ones with the money i get from selling? Makes no sense, no clue how money can realistically grow exponentially with this capping issue. Thoughts?
Where do you see that limit?
If you’re under age 50, the typical limit is $7,000 in 2025, and if you’re age 50 or up, the typical limit with catch-ups is $8,000. If you’re married and file jointly, both you and your spouse may be able to contribute that much each, depending on your household income. Note that you are required to have sufficient taxable compensation (typically earned income from a w2 job or 1099 contract-style work) to cover your contribution amount, and your limits do phase out based on your total modified adjusted gross income and tax filing status.
First, if you’re young enough, $7,000 a year can potentially compound to a substantial amount over the next few decades on its own.
In addition, Roth IRAs can accept rollovers from many other qualified retirement plans. That can make them pretty powerful tools either in conjunction with a workplace based plan if your plan allows in-service rollovers. If it doesn’t, then strategic rollovers into a Roth IRA may still be useful post-retirement to help mitigate RMDs and/or with estate planning.
Regards.
-Chuck
1 Like
I use Robinhood thats the limit on their platform at least. I cant file jointly since im the sole provider in my house and like i stated earlier I’ve been medically retired for 21 years. What i put in is what little i had saved in my high yield savings plus what i i have left monthly i distribute it into my brokerage, my high yield and Robinhood. Im 42, hopefully im not here by 72, but hopeful it will grow into something 
.
Again what stirs me is the low amount i can put forth Roth yearly
I can’t give individual advice, so please consider this as general information for educational purposes only.
If you do not have any taxable compensation (income from work) coming in to you and/or a spouse, then your direct contribution limit to a Roth IRA is $0.
If you have money in a qualified retirement account from any time that you did work, you may be able to roll that money into a Roth IRA. Whether it makes sense to do so or not depends on several factors, including whether you need that money to live on today and where the money will come from to pay any taxes due on the conversion.
That said, what is the financial purpose you are trying to solve for when it comes to the potential use of a Roth IRA? Given the circumstances you shared (medically retired early, not hoping for a long life…) do you really need the tax shelter of an IRA, or would a standard brokerage account meet your needs well enough?
Regards,
-Chuck
2 Likes
Even though i have no taxable income i do have a Roth IRA account. My purpose for doing it is just to have 3 fronts of saving if one goes kaput others can keep me safe. I have a brokerage account ive mentioned before, also a high yield one and now this new one with both Roth IRA and Independent cash account ( the independent one just in case " unlikely" that i need to pull out some it’ll be tax free.
Its just to leave behind however much I can for wife and daughter. Not that we are in need, just the house being sold can net over 800k, but its better to be safe than sorry so they say
Not sure where you’re seeing this, but for those under 50, the maximum IRA contribution limit for 2024 and 2025 is $7,000, with an additional $1000 if you are at least 50 at the end of the contribution year.
Maybe you need to use a broker that allows you to make a full contribution.
How are you making IRA contributions then? In order to make IRA contributions, you (or your spouse) needs to have compensation from employment.
If you made IRA contributions without you (or your spouse, if married) having compensation from employment, you need to contact Robin Hood about removing those excess contributions before April 15, or you will owe an excess contribution tax.
If you have more money than that to invest, then you should be investing in taxable accounts. Those with access to an employer plan (like a 401(k) or 403(b)) can contribute significantly more.
If you have no taxable income, you are not eligible to contribute to a Roth IRA.
AJ
2 Likes
Why the heck has Robinhood allowed me to open one then. Oh darn now ill lose a ton of money if they have to take it out 
Robinhood doesn’t know what your income is, and doesn’t know where it comes from. The rules of direct IRA contributions is that the money has to come from wage income, and it’s always been that way. All the literature about IRAs makes that quite clear.
First rule of investing - “Don’t invest in something you don’t understand”
1 Like
What money are you going to lose? The money is all yours. Since you are disabled, you won’t have to pay an early withdrawal penalty on the earnings. But you will have to pay taxes on the earnings, unless you’ve had the account open for at least 5 years.
AJ
1 Like
Again - I can’t give individual investing advice…
If your concern is a market meltdown causing your investments to go kaput, the act of having your money in a Roth IRA won’t solve that issue. Instead, consider diversifying your holdings among asset classes and hoping that the whole world doesn’t go kaput at the same time. My personal perspective on that front is that in a truly civilization-ending scenario, I’ll likely have bigger issues to deal with than just my portfolio being down…
If your concern is your account credentials being compromised and you losing your assets to theft, consider using multiple unrelated custodians, different logins and passwords for each custodian, and two-factor authentication at each custodian. Also, many financial institutions have additional levels of security they can add to your account beyond those if you tell them that you have been a victim of identity theft.
If your concern is having “bug out” money, you mentioned earlier in this thread that you are 42. If you take money out of a Roth IRA before age 59 1/2, then any earnings on that money is subject to both ordinary income tax and a 10% penalty. You would only be able to remove your direct contributions and any rollover contributions that have aged at least 5 years without paying taxes on that amount. That said, if you are considered disabled, the 10% penalty may be waived in certain circumstances.
Contrast that with a standard brokerage account where there is never a 10% penalty and there are several cases where your investment income would likely be subject to lower tax rates than ordinary income.
On this front, ordinary brokerage accounts get a basis adjustment at the time of the account holder’s death. That will frequently help keep more of the money going to your intended beneficiaries.
If your estate is large enough to where estate taxes might apply (roughly $14 million this year, dropping to roughly $7 million next year unless the rules change), you’ll probably want to talk with an estate planning attorney, rather than a bunch of random strangers on the internet.
Regards,
-Chuck
1 Like
Since @Vako is disabled, he’s exempt from the 10% early withdrawal penalty.
That said - he still isn’t eligible to contribute to a Roth IRA if neither he nor his spouse have earned income, so a Roth IRA is not an appropriate investment account for him.
AJ
Sorry for your dilemma. When you close the account, be sure to let the representative know that you are closing it because you weren’t eligible.
That said - you haven’t lost any money, other than the taxes you will owe on any earnings. If you don’t have any other taxable income, you probably won’t owe taxes on this, either. So, it may not be any impact at all.
AJ
2 Likes
Thanks for that clarification, ill try to withdraw all that and just put it toward basic brokerage. Same stuff different smell