4 benefits you must know about having a Roth IRA

John McDonald January 12, 2019 Comments Off on 4 benefits you must know about having a Roth IRA
4 benefits you must know about having a Roth IRA

The Roth IRA is much-loved by savers who implement it, and for a good reason. Whether you are 30 or 70, this retirement investing scheme provides a number of valuable advantages.

Like any traditional IRA, the Roth version of the IRA (Individual Retirement Arrangement) allows most individuals (investors) save up considerable amount of money. Depending on the age, one can add additional money and make a good investment. Several calculators like the online roth ira calculator can help with the comparison to other traditional IRA schemes.

The significant differences between the Roth and its traditional counterpart bank upon when you pay taxes and how much money eventually goes to the US government. Bankers and financial experts recommend younger people to invest in Roth IRA because they would benefit the most from its returns. However, the ultimate truth is, Roth ITA scheme is an excellent choice for people of all ages. Listed below are 5 benefits about Roth IRA.

You are liable to contribute even after age 70 and above

With traditional IRA schemes, individuals aren’t allowed to make contributions once they hit the age limit. In most cases, people are discouraged from contributing when they turn 71, at which point they are forced to withdraw their money and start paying taxes on it.

The Roth IRA scheme has no investment limit. That means investors are allowed to contribute even after they turn 70 years of age. Moreover, anyone with an earned income can keep contributing towards their Roth IRA account irrespective of their age.

Tax free benefits

With Roth IRA schemes, investors get tax-free income benefits in retirement. Moreover, it’s not just the stream of incomes that come out tax-free. The US government does not tamper with any of the earnings.

Unlike traditional IRA schemes, which offer savers a tax deduction for the year the contribution is made, a Roth IRA scheme allows investors to add after-tax money at present and withdraw principal amount and tax-free money at the time of retirement.

Your heirs can benefit from the money contributed

Any Roth IRA contribution an investor leaves behind for their heirs will be tax-free. Roth IRA contributions are not only tax-free for you; they are tax-free to anybody who inherits them. If an investor plans to leave a lump sum to their children or grandchildren, converting it into a Roth IRA is a way to ensure that they receive the money with tax-free benefits.

Hence, if leaving money to your heir appeals to you, or you want to ensure that taxes do not considerably reduce any retirement money they inherit, a Roth IRA is something you should consider investing into.

Use your IRA distributions at any time

Investing in Roth IRA lets you take out cent percent of what you have contributed at any time tax-free or without any penalties. Only converted balances and earnings in the Roth scheme have withdrawal limits.

This is quite helpful especially when an investor is in an emergency or a situation that requires immediate money. Roth IRA scheme is quite flexible and lets people withdraw their contributions whenever needed.

Using an online roth ira calculator will let you know how much of your contributions you can withdraw without having to pay the penalty.


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