As 2018 kicks off, and we all make those silent promises to ourselves to get in shape, eat healthy, or to spend less time on social media, we should be focusing on our financial health. A great way to accumulate wealth and save for retirement is through a ROTH IRA.
The ROTH IRA is a great tool for those that are currently in a lower tax bracket and expect to be in a high tax bracket at retirement. A ROTH IRA is funded with after-tax amounts into a tax-deferred account. You can contribute up to $5,500 for 2018 ($6,500 if over the age of 50). When the owner of the account begins to make distributions, these distributions, which includes money you contributed plus earnings, will be tax-free. You can make a ROTH IRA contribution as long as your adjusted gross income is $199,000 or lower for those married filing jointly ($135,000 for single filers).
If you are over the adjusted gross income levels to contribute to a ROTH IRA, then you can make a “Backdoor” ROTH IRA contribution. This method allows a taxpayer to deposit their contribution into a nondeductible IRA account, then transfer the contribution to a ROTH IRA. If done correctly, this method has no tax consequences. However, the rules regarding this method can be complex and we suggest consulting with a professional tax or financial advisor before taking this route.
Another ROTH option is the ROTH 401(k) for those that are currently involved in their 401(k). A ROTH 401(k) works very similar to a ROTH IRA but allows more contributions. A taxpayer can contribute up to $18,000 in 2018 ($24,000 if over age 50) to a 401(k) plan. A taxpayer can choose to deposit all, none, or a portion, of their annual contributions to the ROTH bucket. Not all 401(k) plans have the ROTH option, and you should check with your 401(k) plan administrator first.
Instead of spending that $50 a month on a gym membership or healthy food delivery services that you will probably use for about a month, consider allocating those funds into a ROTH account and increasing your chances of financial success.
 There are several rules to making distributions from a ROTH IRA. Please consult a professional tax advisor for these rules.