The Benefits of a ROTH IRA
The ROTH IRA was established in 1997 and offers several unique benefits when compared to a traditional IRA. It can be a great way to save for retirement because it offers several tax advantages over traditional savings vehicles. Americans have recognized these benefits and the ROTH IRA is now one of the most important tools to grow your retirement savings. This article was created to show you the top 5 benefits of a ROTH IRA.
Top 5 Benefits of a ROTH IRA
Tax-Free Earnings – By far the most important feature of the ROTH IRA is tax-free earnings, but there’s a catch. In order to realize the benefits of tax-free earnings, you must meet several minimum criteria including : (1 )be at least 59 years of age, (2) have held the account for at least 5 years. If you meet these requirements can enjoy tax-free earnings where most people would be required to pay capital gains taxes.
Withdraw Funds at Anytime – The ROTH IRA allows you to make withdrawals at anytime up to the amount of your contributions. However, there are limitations and rules with this aspect of ROTH IRAs, so we recommend reading http://www.fool.com/money/allaboutiras/allaboutiras07.htm for a detailed example.
No Mandatory Contributions after age 70 ½ – There are no required contributions after the age of 70.5. This allows you to save additional funds to pass on to your heirs if you desire. A traditional IRA requires minimum contributions after this age.
Start Saving at Any Age – The IRS allows any person with an income below 110,000 to start adding funds to a ROTH IRA. This means that a person of any age can start saving for retirement, as long as their income is below this threshold.
Dividend Tax Savings – If you like to purchase dividend paying stocks for the long term, a ROTH IRA can be the way to go. You will not need to pay capital gains taxes on dividends like you would in a traditional investment account. This will protect you from the risk of increased taxes from new legislation to pay for expanding social programs, such as national healthcare.
Saving for retirement is not something you should but on the backburner. Saving responsibly can be achieved with a ROTH IRA and lead to a comfortable and rewarding retirements. We hope this article helped you learn more about the benefits of a ROTH IRA.
Learn more about ROTH IRA Benefits
We hope this article helped you learn more about the benefits of a ROTH IRA