The Basics of Roth IRAs: How They Work and Why You Might Want One
The Roth IRA is a unique savings account that offers a number of benefits to savers. Unlike traditional IRAs, contributions to a Roth IRA are made after taxes have been paid. This means that withdrawals from a Roth IRA are tax-free in retirement.
Roth IRAs also offer savers more flexibility than traditional IRAs. For example, savers can withdraw their contributions at any time without penalty. This makes a Roth IRA an attractive option for those who want to save for retirement but also have the flexibility to access their funds if needed.
There are a few things to keep in mind before opening a Roth IRA. First, contribution limits apply. The maximum contribution is $6,000 for those under age 50 and $7,000 for those 50 and over. Second, income limits apply. Those with an adjusted gross income of more than $144,000 (or $214,000 for married couples filing jointly) are not eligible to contribute to a Roth IRA.
Additionally, there are a few restrictions on how funds can be withdrawn from a Roth IRA. Generally, withdrawals are only allowed after the account holder reaches age 59 1/2. However, there are exceptions for certain situations, such as disability or death.
There are a number of Roth IRA companies offering these retirement accounts. Each of these Roth IRA companies has its own unique set of features and benefits, so it’s important to compare options before opening an account.
Overall, the Roth IRA is a great savings tool for those who want to save for retirement and have the flexibility to access their funds if needed. If you think a Roth IRA might be right for you, be sure to talk to your financial advisor to get started.