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The Roth IRA is 25 Years Old in 2023!


Expanding a small business on a budget: What to consider?

April 30, 2023

There are various types of retirement accounts that consumers can contribute into for retirement, however, one of the most favorable tax treated accounts is the Roth Individual Retirement Account. Named after the Senator of Delaware William Roth, the Roth IRA was created in 1998 and its employer plan counterpart the Roth 401k was created in 2006.

How a Roth accounts works:
  • Fund with after-tax dollars
  • Grows tax free: no taxes are paid on dividends, interest, or capital gains
  • Withdrawals are tax free as long as certain requirements are met

The principal (original contributions also known as "basis") can always be withdrawn tax free at any time. Here are the requirements for the growth and principal to be tax free AND how to avoid the 10% penalty:


First Time Home Purchase

  • Up to $10,000 of growth is the maximum that can be withdrawn tax free to put towards a first-time home purchase

Expenses related to qualified education, birth or adoption, a person becomes disabled, and to costs to pay for unreimbursed medical expenses when unemployed are all ways that will allow withdrawals to be tax free and eliminate the 10% penalty

Ways to normally fund a Roth account:
Direct contribution into a Roth IRA up to $6500 for 2023
  • There are income limits associated to making contributions and can be found using this link: IRS Roth Income Limits
Direct contribution through an employer sponsored 401k/403b Plan up to a maxmum of $22,500 + $7500(for those over 50 years old)

  • There are no income limits to contribute to a Roth through an employer sponsored plan
Do a Traditional IRA Contribution and then convert to a Roth IRA(Roth Conversion Strategy)
  • This may not always make sense as some may be subject to taxation based on the values of all Individual Retirement Accounts

There are options like a "Super Roth" that could be an option for a limited number of employees through their employer. However, the above ways are the traditional ways that a Roth can be funded.

As always, we recommend that consumers make sure to speak with one of our CFOs to determine if a Roth IRA, Roth 401k, or Roth Conversion strategies make sense because it could save hundreds to thousands of dollars in taxes both now and in the future!

Additional Reading: Roth Conversions and the 5-Year Rule Top 5 Reasons to Roll Over Your 401(k) to An IRA

If you would like to receive more information on making smart money moves for your future, be sure to contact us today!


Saving Strategies for Your First Home in 2023

About the author

Carissa Villacorta smiling for the camera

Cristina Briboneria

Managing Director, Private CFO®

Cristina Briboneria, CFP®, ADPA®, AWMA®, Vice President, Private CFO®.

Cristina is originally from Los Angeles, California but has lived in Houston, TX, Cleveland, Ohio, and now resides in Atlanta, Ga. Cristina graduated from Oberlin College with degrees in Mathematics and History. She earned her Certified Financial Planner(TM) designation from Oglethorpe University.Cristina has also been recognized in Atlanta Magazine as one of Atlanta's Five Star Wealth Managers.

Cristina joined Ameriprise Financial in 2005 and was one of the Top 10 Advisors in her peergroup at the end of her first year. She was rewarded the Mercury Award, Centurion Award, and First Year Top Achiever Award for high achievement. She quickly moved into leadership positions as an Advisor Coach and District Manager in 2006. As a District Manager she earned the Circle of Success award when she lead her team to Top Five in the country throughout the entire company.

Since joining oXYGen, Cristina has built a successful practice of over 175 clients having awide range of demographic from business owners, corporate executives and employees, teachers, clergy, and non-profit organizations. She wanted to help build a company that was tailored specifically towards Gen X & Y."These generations have been overlooked and will be a driving force in our future economy. They will be a force to be reckoned with--many of of my clients are purpose driven individuals wanting to make a difference in their places of business but also wanting the knowledge of how to be financially responsible and successful."

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Background and qualification information is available at FINRA's BrokerCheck website.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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