The ROTH IRA: Easy money for retirement. January 15
The Roth IRA was first established in 1997, and for those who qualify for a ROTH it has become of the one most widely used and popular types of individual retirement accounts.
One major difference between the ROTH and other types of IRA programs is that the contributions you make to your ROTH IRA during the year do not entitle you to any tax deductions. Many taxpayers rely on tax deductible contributions to help them offset income and pay less to the IRS, so the ROTH may not be appropriate for those individuals. But what makes the ROTH so attractive to others is that when you later withdraw your money through qualified distributions – including the interest or appreciation you’ve gained on your original contributions – you do not have to pay any taxes on those funds.
For fans of the ROTH IRA, that makes it one of the easiest ways to get virtually “free” money for retirement, and many consider it the most generous IRA program ever offered. For withdrawals or distributions to qualify you have to leave your money in the account for at least five years from the date the ROTH is started. You also have to be at least 59 and a half years old to start taking money out tax-free. But you can also use ROTH funds for special circumstances such as help of up to $10,000 with buying your first home or if you become disabled. In the event of your death, the ROTH funds can go to your beneficiaries.
Specific eligibility requirements stipulate how much you can contribute to your ROTH each year, and those guidelines depend upon whether you are single or married and how much income you declare on your taxes. To learn more about the ROTH IRA and how it may provide a great path to a wealthy retirement, talk to your financial advisor or visit a government ROTH IRA information Web site.