If you’re like me, you love the idea of having tax-free income in retirement. The primary way to do that is by investing in Roth retirement accounts. Having more money in a Roth is terrific because the account growth is never taxed, if you follow some basic rules.

However, the problem is that Roth IRAs have income limits prohibiting high earners from contributing. But there are some easy options and workarounds to consider. This post will review Roth benefits and four ways to boost your Roth investments regardless of income.

What is a Roth IRA?

Unlike a pre-tax, traditional IRA, you don’t get an upfront tax deduction for Roth contributions. However, A Roth allows you to make tax-free withdrawals after age 59.5 if you’ve owned the account for at least five years.

Plus, Roth accounts don’t have required mini mum distributions (RMDs). With a traditional retirement account, you must pay income taxes on withdrawals and begin RMDs at age 73 (or 75 starting in 2033). 

In addition, you can withdraw Roth IRA contributions (but not the earnings) at any time without paying taxes or a penalty. That gives you a lot of flexibility to tap a Roth IRA for any reason. Of course, I recommend staying out of your retirement account so it can grow as much as possible.

You can contribute to a traditional IRA, Roth IRA, or a combination up to an annual limit. 

For 2024, the limit is $7,000 or $8,000 if you’re over 50. For example, if you’re 30, you could put $2,000 in a traditional IRA and $5,000 in a Roth IRA.

What is the Roth IRA income limit?

I mentioned that you can’t contribute to a Roth IRA when you earn more than an annual threshold. The limit depends on your tax filing status and modified adjusted gross income (MAGI).

Here are the 2024 income limits to qualify for a Roth IRA:

• Single taxpayers must have a MAGI of less than $161,000 but qualify for a reduced contribution from $146,000 to $160,000. You can make a full Roth IRA contribution with MAGI under $146,000.

• Married taxpayers filing jointly must have a MAGI of less than $240,000 but qualify for a reduced contribution from $230,000 to $239,000. You can both make full Roth IRA contributions with MAGI under $230,000.

• Married taxpayers filing separately can use the single limits if they haven’t lived together in the past year. If you lived together, you can’t contribute to a Roth IRA with a MAGI of $10,000 or higher.

If you qualify to contribute to a Roth IRA but become ineligible in the future, you can keep your account indefinitely and enjoy its tax-free growth. However, you can only make new contributions if your income dips below the annual allowable limit. 

ALSO READ: 10 Things Every First-Time Investor Should Know

Ways to fund a Roth no matter your income

While the Roth IRA income limits make it impossible for high-earning individuals and married couples to contribute directly to one, here are four ways you can still boost a Roth.

Contribute to a Roth at work.

If your employer offers a retirement plan, such as a 401(k) or 403(b) with a Roth option, it has no income limits. Unlike a Roth IRA, workplace Roth accounts allow you to participate regardless of income!

For 2024, you can contribute up to $23,000 or $30,500 if you’re over 50 to most workplace Roth retirement plans.

LISTEN ALSO: Roth IRA vs Roth 401(k)–10 differences investors should know

Make mega backdoor Roth conversions.

If you have a workplace retirement account, you may be able to put additional funds in a Roth using a mega backdoor conversion strategy. It requires you to make after-tax contributions to a traditional workplace retirement plan, such as a 401(k), and then convert them to a Roth. 

Not all retirement plans allow after-tax contributions, so check the rules or ask your benefits administrator if a mega backdoor strategy is possible. But if your plan allows after-tax contributions, that enables you to save more than the typical annual limit of $23,000 or $30,500 if you’re over 50.

If allowed, you or your employer can contribute up to $69,000 or $76,500 if you’re over 50, not exceeding your annual income. That leaves an additional $46,000 ($69,000 – $23,000) in potential after-tax contributions, which could come from you or your employer.

For example, if you’re under 50 and make $100,000, you could contribute up to an additional $46,000 in after-tax contributions to your retirement plan at work. The next step in the mega backdoor strategy is converting your after-tax contributions to a Roth, and there are two options.

If you have a Roth at work, one option may be to convert after-tax amounts from your traditional 401(k) directly to your Roth 401(k), known as an in-plan Roth conversion. Or, if your workplace plan allows it, you may be able to roll over your after-tax contributions from a traditional 401(k) to a Roth IRA, known as an in-service withdrawal.

Whether you convert after-tax workplace contributions to a Roth 401(k) or Roth IRA, there would be no taxes except any earnings on the contributions. But if you do a mega backdoor conversion quickly, there should be minimal account gains subject to tax.

So, being eligible for a mega backdoor Roth conversion depends on what your workplace retirement plan allows. Some plans have a feature that automatically converts after-tax funds to a Roth at regular intervals. If allowed, you can use this advanced strategy to make after-tax contributions and do an in-plan Roth conversion or an in-service withdrawal and rollover.

READ ALSO: How to use a mega backdoor Roth conversion

Make Roth IRA conversions.

Another way to boost your balance in a Roth, even if you earn too much to qualify for Roth IRA contributions, is doing one or more Roth IRA conversions. With a Roth conversion, you withdraw funds from a pre-tax account, such as a traditional IRA or 401(k), and move them to an after-tax Roth IRA. However, that triggers ordinary income taxes you must be prepared to pay.

While the downside of a Roth IRA conversion is owing taxes, the benefit is that there are no annual income limits. Plus, you can convert as much pre-tax money to a Roth IRA annually as you like because there isn’t a yearly conversion limit. That allows you to withdraw and pay taxes on as much money as you want to move into a Roth IRA.

For example, if you want to convert $50,000 from your traditional IRA to your Roth IRA, your annual taxable income increases by $50,000, significantly increasing your tax liability. 

So, it’s critical to be strategic with conversions and only do enough to stay in the lowest possible tax bracket or do them when you have a lower-income year. You might spread conversions over multiple years to better manage your tax bill. 

Many people do Roth conversions in the so-called “gap” years after they retire and begin earning less but before their Social Security benefits and RMDs start. Knowing if a Roth conversion is right for your situation depends on many factors, including the expected future benefits for you, a surviving spouse, or beneficiaries.

RELATED: When should I do Roth conversions?

Make backdoor Roth IRA contributions.

If you earn too much to qualify for a Roth IRA, you can also make after-tax contributions to a traditional IRA (which has no income limit) and convert them to a Roth IRA. While you typically make pre-tax contributions to a traditional IRA, nondeductible, after-tax contributions are allowed. However, the annual contribution limits, $7,000 or $8,000 if you’re over 50, still apply.

So, a backdoor Roth is a legitimate way to move small amounts of after-tax money from a traditional IRA to a Roth IRA, even if you earn too much for front-door contributions. 

Like a mega backdoor strategy, you don’t owe taxes on backdoor Roth IRA contributions, except on any investment growth earned between the time of your contribution and the Roth rollover. If you do it quickly, your earnings and resulting income tax should be small. 

However, the downside of a backdoor Roth is that if you already have a traditional IRA with pre-tax funds, you’re subject to the pro-rata rule, requiring you to lump all your IRAs together when you make a distribution. 

Therefore, a backdoor Roth works best if you have no pre-tax IRA balances. Otherwise, a portion becomes a taxable conversion based on the percentage of your nondeductible and deductible IRA balances. But if you don’t have any pre-tax IRA funds, you could move any amount (up to the annual contribution limit) from a nondeductible IRA to a Roth IRA without triggering taxes. 

There is a potential workaround to eliminate the pre-tax conflict if you have a retirement plan at work that allows incoming rollovers. Theoretically, you could roll over pre-tax IRA funds to a traditional 401(k). Or, if you’re self-employed, you could move pre-tax IRA money into a SEP IRA or solo 401(k) that allows it.

Always speak to a tax professional or financial advisor before making any big retirement account moves. Everyone’s situation and retirement plans are different. Get guidance on whether paying taxes now is worthwhile in exchange for future tax-free Roth benefits.

RELATED: Roth IRA vs Roth 401(k)–10 Differences Investors Should Know

Before we go, I want to thank the TikToker, EYEBVEE, for her recent post about the show! She makes some great money and budgeting content, so check her out if you’re on TikTok.