Many of my clients and friends have inquiries about Roth IRAs. A Roth IRA can be a great option for certain people. It all depends on your specific financial situation. People who are just starting out or are only a few years into their career (and thus in a lower tax bracket) can lock in a lower tax rate on contributions now, and then pay no taxes when withdrawing money in retirement — even if you're in a higher tax bracket. People who make below the income limitations for Roth IRA contributions can also use a Roth as a good source of tax-free wealth accumulation.
ACCESSIBILITY
You can withdraw your Roth IRA contributions at any time, tax and penalty free. Most folks aren’t aware of this!
Roth IRAs can provide you with some solid flexibility. That means you could use a Roth IRA to save for college, buy a home, or even as a backup emergency cash savings fund. You can withdraw all of your contributions at any time, tax-free. This may seem counterintuitive given that you are not supposed to touch the money until retirement, but the IRS allows you to access these funds if you require them immediately for some reason. There are no tax implications if you do this.
CAN I CONTRIBUTE?
As alluded to earlier, it's important to remember that Roth IRAs have income limits. That means you could be one promotion or new job away from being unable to contribute. Getting married can also affect your eligibility because it significantly raises your household income. The income limits for 2022 are $144,000 for singles and $214,000 for married couples. (If your income is close to that amount, you may be able to contribute in partially.) However, if you opened a Roth IRA earlier in your career when your earnings were lower, you may be unable to contribute to it now.
What happens to the money in your Roth IRA if that happens to you? Is it yours still? Will you be able to participate again in the future? Don't be concerned; you have a plethora of options.
YOUR OPTIONS
The Roth IRA Act of 1997 gives taxpayers who already have an existing Roth account the option of transferring those funds to a new Roth IRA holder provided certain conditions are met. If you qualify, you can use the "backdoor" method to transfer the funds to a different Roth IRA. You transfer money from one Roth account to another using this method without paying tax or penalty on the money you withdraw from the first account. Then you transfer the entire amount to the second account. This may be useful if your current Roth IRA provider no longer provides the services you require. Or it's possible that you're simply dissatisfied with the performance of your account and want to switch providers. For example, perhaps you want your investments to be more socially responsible than those offered by your provider. Perhaps you'd prefer to concentrate on stocks rather than bonds. The bottom line is that you will have more options with different providers — and in turn, more control over your money. Remember that a backdoor transfer may affect your eligibility for future Roth IRA contributions, so keep that in mind before proceeding.
You can always keep your money in the original Roth IRA until retirement and withdraw it as needed. You can contribute to it again if your circumstances change in the future, but you can never add to the original amount you've contributed. However, this is not an option for everyone. You'll need to reconsider whether you can afford to make additional contributions to your IRA over time and whether that fits into your overall retirement plan. Remember that this strategy may limit your ability to take advantage of other tax breaks, such as catch-up contributions for people over the age of 50.
WHAT ABOUT MY SPECIFIC SITUATION?
If you are self-employed and have your own 401(k) plan in addition to your traditional IRA, you can transfer funds from the traditional IRA to the 401(k) and then roll the funds over to a Roth IRA. If you're having trouble meeting the required minimum distribution (RMD) for your traditional IRA each year, this could be a good option. However, you may have to pay a higher tax on the amount transferred than if you had left the money in the traditional IRA in the first place. However, it may be preferable to taking the RMD yourself. Remember that this is a complex maneuver that may result in tax consequences or other restrictions for you. You’ll want to consult with a financial professional before making a final decision about this option.
FINAL THOUGHTS
A Roth IRA can be a great tool for wealth accumulation when used appropriately. Given the tax-free growth of the investments inside a Roth IRA, it can be a very attractive option for the right person.
Updated 4/29/2026
Cetera Wealth Services, LLC exclusively provides investment products and services through its representatives. Although Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services, Cetera representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice. Some IRAs have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney. Distributions from traditional IRA’s and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty. Converting from a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.