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Roth IRA for retirementPosted by SEP-SOLO-IRA-401k-ROTH on: 2007-03-01 15:43:41 in category:
Roth IRA [ Print | Permalink / 0 Comment(s) ] Rex Truman What's a Roth IRA? And is this the best retirement plan for you? Well, so long as you qualify for a Roth IRA plan, it is probably the best bet because of its flexibility. But as with other plans, the government doesn't give too much away! First, you don't qualify for a Roth IRA if you earn more than $110,000 or if you and your spouse have combined income of more than $165,000. Also, you must keep the earnings in the account until you are 59.5 years old, and it must remain in the account for 5 years. You don't get any tax deductions for investing in a Roth IRA retirement plan, but all the earnings from the plan can be withdrawn tax free. In other words, if you invest in one for a long time, and you invested a total of $100,000, and earned $100,000 over 15 years, then you could withdraw that $100,000 of earnings tax free - so long as you meet the requirements. On the other hand, you are able to withdraw your contributions at any time - after all you might have a financial crisis and need to. So, it is important when maintaining a Roth IRA retirement account to keep the contributions and earnings separate. If you don't have an IRA, but some other retirement plan, you will need to set up an ordinary IRA plan and contribute to that for two years before you are able to invest in a Roth IRA plan. There are no minimum distributions, so many people rely on other investments or pensions for a while after retiring, while their earnings continue to grow tax-free. However, you must keep the earnings in the account until you are 59.5 years old, and they must have been in the account for five years. What about the limits on contributions? These are set at $4,000 for 2006, unless you are over 50, in which case you can contribute $5,000. The main advantage of the Roth IRA retirement plan is that you get more flexibility - you can take your contributions out whenever you need or what to, and you can take out as much or as little of your earnings once you reach retirement age. Of course, the best thing is to start early on a Roth IRA, as it is with any retirement plan. About the author: Retirement Planning |
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