Secure Your Financial Future: How Roth IRAs Build Your Retirement Savings

Planning for retirement is essential, and a Roth IRA can be one of the best tools to help you grow your savings. In this blog, we’ll break down the basics of Roth IRAs, how they work, and why they could be your perfect retirement account.

What Is a Roth IRA?

A Roth IRA is a retirement account you contribute to with money you’ve already paid taxes on. While there’s no immediate tax break, the real benefit comes later—your investments grow, and you can make tax-free withdrawals in retirement. You can withdraw earnings if the withdrawal is qualified, which usually means you're at least 59½ and your Roth IRA has been open for five or more years. Other situations may also qualify for tax-free withdrawals, including:

• Disability: Withdrawals due to disability are typically qualified.
• First-Time Home Purchase: Withdrawals of up to $10,000 for a first-time home purchase can be qualified.
• Beneficiary/Estate: Distributions made to a beneficiary or your estate after death are also typically qualified.

The other big difference with a Roth IRA is that you’re not required to start taking money out at age 73, unlike other retirement accounts. You can leave your money in the account for as long as you want, giving it more time to build.

Who Can Contribute to a Roth IRA?

Roth IRAs are great for those who expect to pay higher taxes in retirement. You contribute money that’s already been taxed, and qualified withdrawals in retirement are completely tax-free.

However, there are income limits to be aware of:

• Married Filing Jointly: You can contribute the full amount if your Modified Adjusted Gross Income (MAGI) is below $236,000, with contributions phasing out up to $246,000.
• Single Filers: Full contributions are allowed with a MAGI under $150,000, and the ability to contribute phases out at $165,000.

If you earn above the income limits, you can still access Roth IRA benefits through a Roth conversion. This means moving money from a traditional IRA into a Roth IRA and paying taxes on the amount converted. This can be a smart move if you anticipate a higher tax rate in retirement.

What are the Contribution Limits?

In 2025, you can contribute up to $7,000 to your IRAs, or $8,000 if you are age 50 or older. This is a combined limit for both Roth and Traditional IRAs. If you have both types of accounts, you can divide your contributions between them any way you choose, as long as the total does not exceed the annual limit.

Why Choose a Roth IRA?

Now that you know how much you can contribute, let’s explore why a Roth IRA might be the right place for those dollars. It offers some attractive perks, especially if you're thinking long-term.

Here’s why it might be a smart choice:

• Tax-Free Withdrawals: Once you reach retirement age, qualified withdrawals from a Roth IRA are tax-free, making it a great option for those expecting to be in a higher tax bracket in the future.
• No Forced Withdrawals: You’re not required to start taking money out at a certain age. That means your savings can keep growing, untouched.
• Easy Access to Contributions: You can withdraw the money you’ve contributed to your Roth IRA (but not the earnings) at any time, without paying penalties, providing great flexibility.
• Smart for Young Professionals: If you're just starting your career and expect your income to increase, a Roth IRA allows you to pay taxes at today’s rate, which could lead to significant savings later in life.
• Tax Diversification: Having both Roth and Traditional retirement accounts gives you more choices in retirement, making it easier to manage your taxes.

For more detailed information, including contribution limits, income thresholds, and withdrawal rules, visit the IRS page on Roth IRAs.

The Wait is Almost Over: Roth IRA Benefit Coming Soon

We’re excited to announce that Roth IRAs are coming soon to WealthRabbit! You’ll be able to easily manage your Roth IRA and take advantage of powerful features designed to help you build a stronger retirement plan, including:

• Personalized Investment Portfolio: During onboarding, you’ll take a risk assessment quiz to create a portfolio tailored to your retirement goals.
• Fiduciary-Backed Plans: WealthRabbit is supported by licensed fiduciaries who are committed to acting in your best interest.
• Fully Digital Setup: Handle all paperwork online—e-sign documents and get started in minutes, with no printing or mailing needed.

Be among the first to take advantage of the Roth IRA benefit with WealthRabbit. Sign up now to start building your tax-free future and take control of your retirement savings!

About the Author

Jason Ackerman, CPA, CFP®

Co-Founder & CEO at WealthRabbit

Jason Ackerman is a CPA, CFP®, and CGMA, and Co-Managing Partner at BNA CPAs & Advisors, where he has helped grow the firm several times over. He brings that same growth mindset, and a healthy skepticism of unnecessary complexity, to his work as Co-Founder of WealthRabbit. That combination of hands-on CPA experience and fintech innovation shapes the WealthRabbit blog's plan-comparison guides, so business owners can make a decision without needing a CPA in the room.