I’ve mentioned Roth IRAs a few times. Because the growth in a Roth account is entirely tax-free, they are an exceptional vehicle for long-term savings. But perhaps because they are so attractive, the government limits Roth contributions. To contribute to a Roth IRA, your income must fall below a certain threshold. Even if you employ the so-called back-door Roth method, you’re still limited by the annual IRA contribution limit, which isn’t terribly high. If your employer has a 401(k) or 403(b) and offers a Roth option, those have no income threshold and higher contribution limits. But still, you can only contribute up to the employee maximum and no more. Employer matches and profit sharing contributions must all be made on a tax-deferred basis.
If you’re a high-income worker, you might be wondering if there’s a way to contribute more to a Roth account. It turns out there is: Sometimes called the “Mega Back-Door Roth,” I described the process in detail in this article.
