These two accounts will ramp up your tax-free income in retirement

In 2019, the IRS will permit savers to put away up to $6,000 in a Roth IRA, plus $1,000 if you’re 50 or older.

The exact amount of money you can save in this account will be based on your modified adjusted gross income or MAGI.

If you’re single and with an MAGI of up to $122,000 (or married-filing-jointly with up to $193,000 in MAGI), you can contribute up to the annual limit.

Contribution levels drop off from that point. Single filers with at least $137,000 in MAGI ($203,000 if married and filing jointly) can’t make any direct contributions to their Roth IRAs.

High earners who are over those income thresholds can try a backdoor Roth contribution.

In this case, they would make a nondeductible contribution with after-tax dollars to a traditional IRA and convert it to a Roth.

This move isn’t for amateurs. Work with your accountant when opting for a backdoor Roth contribution to make sure you don’t accidentally trigger income taxes.


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