Why Do Roth IRAs Have Income Limits? – A Guide to Forex Trading

Roth IRAs, commonly known as the ‘backdoor route to retirement accounts’, have become increasingly popular with investors due to their attractive tax-free withdrawal option. But they also come with a specific set of rules, including one that determines who qualifies to open and fund a Roth IRA — an income limit. Understanding what that limit is, and why it exists, is important to anyone considering investing in a Roth IRA. In this article, we’ll explain why do Roth IRAs have income limits and their advantages and disadvantages. Roth IRAs have income limits because they are designed as a retirement savings incentive for individuals and families that fall under certain income thresholds. If individuals exceed such limits, they lose the ability to take advantage of the tax-free growth of a Roth IRA. The income limits also restrict the amount of financial contributions that can be made to a Roth IRA each year. This is to ensure that the intended recipients of the Roth benefit, those of lower incomes, receive the most benefit from the retirement savings option.