Roth IRAs (individual retirement accounts) double as investment vehicles in the United States, allowing Americans to obtain retirement income without tax penalties. However, high-income earners may not be eligible for Roth IRAs, but can seek other avenues.

Eligible people can fund Roth IRAs in three ways. First, they can contribute directly. The annual contribution limit in 2024 is $7,000 for people 49 and younger and $8,000 for those 50 and older.

People can also fund a Roth IRA by converting their traditional IRA assets, such as SEP IRAs and SIMPLE IRAs thanks to specific regulations. Spouse beneficiaries must follow different rules to convert the accounts.

The third way to fund a Roth IRA is to roll over or convert funds from a 401(k) or employer-sponsored plan. Individuals with an existing Roth IRA can simply roll funds over from their 401(k). Otherwise, they can create a new Roth IRA by fully converting a 401(k).