![](https://biggerpockets.s3.amazonaws.com/assets/member-blog-image.jpg)
![](https://biggerpockets.s3.amazonaws.com/assets/logo@3x.png)
The Roth IRA Turned 20 in 2018 & is Aging Well
I remember opening my first Roth IRA in 1998 when it became first available and contributing the maximum contribution limit of $2,000 at the time. Fast forward 20 years later and the contribution limits have more than tripled.
IRS data shows that Roth IRAs hold over $625 billion, more than 19 million people own Roth IRAs, and 20 laws have made changes and enhancements to the Roth IRA.
The Roth IRA was created by the Taxpayer Relief Act of 1997, and they have explode in popularity for a number of reasons. While contributions are not tax deductible like traditional IRA contributions, Roth IRA gains are tax free when distributed. In addition, Roth IRAs are no subject to RMDs like traditional IRAs and contributions can still be made past age 70 1/2. Under current law, annual contributions cannot be made to traditional IRAs once the IRA owner reaches age 70 1/2.
We have the late Senator William Roth, Jr. (R-Del.) to thank for both the Roth IRA and the Roth Solo 401k.
While Traditional IRA balances are almost 10 times higher than Roth IRAs according to The IRS Statistics of Income statistical tables, and traditional IRAs have been around for 43 years, Roth IRAs continue to grow in popularity due to inevitable rise in tax rates.
While more former employer retirement funds are transferred to traditional IRAs over Roth IRAs- for example, In 2015, $8.4 billion was rolled over to Roth IRAs and $460 billion was rolled over to Traditional IRAs, the Roth IRA has enjoyed higher regular contributions over the traditional IRA in recent years. In 2015, $21.7 billion in regular contributions were made to Roth IRAs and $17.7 billion to Traditional IRAs.
Data also shows that Roth IRA contributors tend to be younger than Traditional IRA contributors. In 2015, 40% (2.6 million) of Roth IRA contributors were under age 40, compared to only 19% (0.8 million) of Traditional IRA contributors.
Lastly, Roth contributions to solo 401k plans have also been on the rise. This is probably due to the Roth solo 401k plan rules allowing for higher contributions--for example, for 2018 the Roth solo 401k contribution limit is $18,500 vs $5,500 for the Roth IRA.
Comments