7 Costly Roth IRA Mistakes Most Beginners Make

The Top 7 Roth IRA Mistakes

1. Leaving Money in Cash: Depositing funds into your account is not investing. You must buy index funds, ETFs, or stocks.
2. Contributing While Over the MAGI Limit: Exceeding income thresholds triggers a 6% annual excess contribution excise tax until corrected.
3. Ignoring the Backdoor Option: High earners assuming they cannot participate in Roth IRAs.
4. Withdrawing Earnings Prematurely: Dipping into investment gains prior to age 59½ and 5 years.
5. Not Benefiting from Catch-Up Limits: Missing the extra $1,100 contribution starting at age 50.
6. Forgetting to Update Beneficiaries: Neglecting primary and contingent beneficiary designations.
7. Waiting Until the Last Minute: Delaying contributions until April instead of investing in January.