Have You Heard Of The Roth IRA?

Perhaps you are new to investing and the Roth IRA is something that you've heard about on television or read in the paper, but you don't know the details. Simply put, it is a retirement investment option designed to help working families plan for their future that offers many benefits with few restrictions. In fact, a Roth IRA is much more flexible than both a 401k and a traditional IRA, and can provide retirement options that were never within reach of average working American families.

There are benefits as well as drawbacks to the plan, and they are too numerous to discuss here, but a qualified financial planner can walk you through the entire process and answer any questions that you may have. That being said, let's talk about some of the key features and limitations associated with the Roth IRA retirement savings plan.

First, it is important to know there are income limits that apply to the qualification of the program. You cannot earn much over 100k per year as a single person, and if you are married, your combined income should be less than around 160k. Additionally, there are limits on the amount of money that you can invest into a Roth IRA each year, and that limit is 5k for those under 60 years of age, and 6k for those of you who older. However, for many working families, this is not something that is of real concern.

The benefits are that your tax risk is minimal, and you enjoy many more tax breaks than you would through traditional IRA's or other retirement savings tools. In addition, you can withdrawal some of the money after 5 years instead of the retirement age limit that standard IRA's provide. Additionally, the Roth IRA allows you to take money out of your account to finance certain purchases, such as educational expenses, unexpected medical costs and even the purchase of your first home. Try doing that with a 401k and see how much you will be penalized for the privilege.

Another fantastic benefit is that you don't have to be rich to get started. Unlike regular retirement IRA's, you can start funding your Roth IRA with no money down in some cases as long as you make regular payments every month. This means that almost anyone can qualify and get started with planning for their retirement goals as soon as they open their account. In fact, if you only put a hundred dollars each month into your account and do so for forty years, you can see your investment grow to hundreds of thousands of dollars. If you can fund the maximum allowance of 5k per year, that can translate into well over a million and a half dollars.

The Roth IRA was designed to be easy, worker friendly while providing real retirement planning solutions which are in reach of most Americans. Getting started requires a short consultation with a financial planner which should be done with any investment strategy you want to undertake. They can explain the details of the program and come up with a strategy based on your unique needs and goals.

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