Place it into a target retirement fund until you know what you're doing, keep putting cash it in it, let it grow, retire early. For 2020, the maximum contribution to a Roth IRA is $6,000 per year. For the 2020 and 2021 tax years, that's $6,000, or $7,000 if you're age 50 or older. With a ROTH you put in AFTER TAX money. Since Roth IRAs are funded with after-tax dollars, not only do the investments grow tax-free but the withdrawals at retirement are also tax-free. You might have incorrectly formatted line breaks. With a Roth IRA, your contributions are made after-tax. In retirement, when you withdraw your savings. You can contribute up to $5,500 of your earned income per year. I think what you’re saying is that you funded a ROTH IRA with the maximum amount of money, which means it is likely sitting in a money market account. You can't contribute to a Roth IRA if you make too much money. This is not really a thing for years because people can just do a backdoor Roth IRA. The return on your Roth IRA is determined by the investments you choose, not a set interest rate. This is a very optimistic growth rate, almost too optimistic, and it doesn't even take inflation into account. How a Taxable Account Can Behave Like a Roth IRA . You should definitely open a Roth IRA and put down the maximum amount you can each year. For tax years 2020 and 2021, you can contribute $6,000 to a Roth IRA as long as your income doesn’t exceed a certain amount. Press J to jump to the feed. It must be 'earned income', not dividends or royalties, you know pay-check stuff. https://www.nerdwallet.com/blog/investing/backdoor-roth-ira-high-income-how-to-guide/. Taking the tax out of the principle and letting it grow tax free is the same as letting an untaxed investment grow and taxing it at the end. If you Roth convert $15000, then your change in tax will be $5000 * 0.12 + $10000 * 0.22 = $600 + $2200 = $2800 more tax. Whenever the investments in your account earn a dividend or interest, that amount is added to your account balance. Continue to allocate money yearly til retirement. So I'm going to just add the $6,000 to that fund. So you want your taxable account to resemble a Roth IRA? It might surprise you to discover your Roth IRA or Roth 401(k) can hurt your chances to retire in comfort. Here's what to know about Roth IRA interest rates. That's 15% of your investment that you get back with an IRA! How do we magically make these taxes disappear? What is the amount I should invest into my Vanguard account? Up front, before you contribute.Your earnings then grow tax free. Many here would probably suggest Vanguard, but Schwab and Fidelity are both good. Cookies help us deliver our Services. NOw we are deciding on how to invest our earnings, while maintaining the ROTH tax-free benefits. $6k isn't exactly a high limit. 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