I’ll Turn 50 in 2022. Can I Contribute $7,000 to My Roth IRA Starting in Tax Year 2022 or 2023?

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Welcome to Ask Clark, a column designed to answer your financial questions, by money expert Clark Howard.

Can I Contribute to My Roth IRA the Same Year I Turn 50 or Do I Have to Wait a Year?

Tina from Florida asks: “I understand that at age 50 and above, you can contribute $7,000 to the Roth IRA. I’m turning 50 in June 2022. I’m trying to figure out when to change my biweekly contributions. Can I contribute the extra $1,000 starting in tax year 2022 or do I have to wait until 2023?”

Clark’s Take on When You Can Start Contributing Extra to Your Roth IRA

Clark says: “You do it in the year you turn 50.”

The IRS issues rules on annual contribution limits for retirement accounts. For Roth IRAs, the 2021 limit is $6,000 if you’re under 50 years of age and $7,000 if you’re 50 or older. As of this writing, the IRS has not yet issued information for 2022.

Learn more about retirement contribution limits.

If your employer offers a high-deductible health plan, Clark also suggests that you open and contribute to a health savings account (HSA).

“An HSA is an even better place to stash cash for your retirement years than a Roth IRA.”

The reason Clark says an HSA is more advantageous than a Roth IRA is because of the tax benefits. Here are some of them:

  • Your contributions may be excluded from your gross income, which lowers your tax liability.
  • The interest you grow in your account is tax-free.
  • You get to pay for eligible expenses tax-free.

“So that makes it one step better than a Roth although it’s more limiting since it’s only for health-care expenses,” Clark says.

Here’s everything you need to know about how HSAs work.

To hear Clark’s full take on this question, listen to the segment:

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