Retirement Planning

Roth IRA

Roth IRAs benefit investors that are in a lower tax bracket now than they expect to be in the future; which is often the case with younger investors. For individuals looking for tax diversification in retirement, the Roth IRA is one of the few buckets they can create that ensures a stream of tax-free income in retirement.

Roth IRAs can be an excellent tool with many advantages for investors, such as:

  • Tax Benefits – Unlike the traditional IRA, which gives investors a tax deduction for the year the contribution is made, there is no tax deduction for a contribution made in to a ROTH IRA.  The Roth version allows investors to contribute after-tax money today and withdraw principal and earnings tax-free at retirement. Distributions from a Roth IRA do not increase Adjusted Gross Income. This differs from a traditional IRA, where all withdrawals are taxed as Ordinary Income, and a penalty applies for withdrawals before age 59½.
  • Flexibility – There are no penalties on withdrawals of Roth IRA contributions, however, there is a 10% federal penalty tax on withdrawals of earnings before age 59 ½.
  • No Age Limits – With a traditional IRA, investors must stop making contributions when they turn 70 1/2 years old, at which point they are forced to take distributions and begin paying taxes on that money. The Roth IRA has no required minimum distributions. That means you can live to 120 without ever making distributions from your Roth IRA. 

Discuss your investment needs with us today.

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