Roth Ira Retirement Plans
A Roth IRA plan is a good source of income for retirement
. With this individual retirement account, the senior can get tax-free returns from his or her contributions, although no tax deferral options are present. Eligibility for a Roth IRA is also easier to obtain - members can be self-employed, or have compensation that is subject to tax. However, the member's income should not go beyond the Roth income limit. Account contributions come from taxed income, although once your plan matures, withdrawals from your earnings are mostly tax-free.
IRS-approved financial institutions facilitate Roth IRAs for a member's retirement nest egg. These institutions include brokerage firms, insurance firms, banks, and a number of credit unions.
One advantage to using the Roth retirement account as part of your retirement program is the duration of contributions. You can contribute towards your Roth IRA after you've reached 70 and a half years of age. You can also have a Roth IRA and another employee-sponsored retirement plan, for example. Other benefits from this plan include tax-free returns if you're set on buying your first home, and tax-free withdrawals if you're at the minimum age of 59 and a half years, and your Roth IRA has been in effect for five years.
However, the Roth may not be for every senior. Disadvantages of this program include heavy penalties of ten percent, as well as the full amount of taxes for early withdrawals. In addition, contributions to this program aren't tax-deductible. For example, if you're counting on retiring early and using your earnings to fund your retirement at the onset, you might lose a lot of money due to the relatively large penalty. To know more about the pros and cons of a Roth IRA, and if it fits your retirement plans, contact your tax advisor or retirement planner.
by: Carina Smith
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