A Roth IRA is a special type of Individual Retirement Account that offers a different tax advantage compared to a traditional IRA. With a Roth IRA, you contribute after-tax dollars, meaning the money you put into the account has already been taxed. The magic happens when you start withdrawing funds—because those withdrawals, which can begin at age 59 and a half, are completely tax-free, provided certain conditions are met. This includes the earnings on your contributions, which means all the growth in your Roth IRA over the years doesn't get taxed upon withdrawal.
Another perk of the Roth IRA is that there are no required minimum distributions (RMDs) during the account owner's lifetime, giving you more control over your funds and allowing your investments to continue growing tax-free for as long as you choose. It's an excellent option for those who anticipate being in a higher tax bracket in retirement or for anyone who values tax-free income in their golden years. Just like with a traditional IRA, there are contribution limits and rules, so getting advice from a financial professional can help you navigate the specifics and make the most of your Roth IRA.
What is a Roth IRA?
LP
Len Perroots
Updated 5 months ago
Did this answer your question?
😞
😐
😃