IRA

Regular vs. Roth

Posted October 27, 2008 by Bernz

iraThe vehicle we now call the Roth IRA was born on January 1, 1998 as a result of the Taxpayer Relief Act of 1997.  The Roth IRA provides no deduction for contributions, but instead provides a benefit that isn’t available for traditional retirement accounts: if you meet certain requirements, all earnings are tax free when you or your beneficiary withdraw them. Other benefits include avoiding the early distribution penalty on certain withdrawals, and eliminating the need to take minimum distributions after age 70½. Remember that in either cashing cashing an IRA is very expensive and should only be done for very extreme circumstances.

Plus and minus

The nice part is that you get a tax free retirement vehicle with the downside of not being able to deduct the money you give to your Roth IRA.  Which is more important depends on the individual like your income level and how soon you will need the money. Usually a Roth IRA is better in most people’s cases especially when the income level in is beneath 160,000. Also you will not have to take money from it until age 70 ½.

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3 Benefits of a Roth IRA

Posted October 14, 2008 by Bernz

What’s a Roth IRA? It’s an individual retirement arrangement (aka retirement savings account) you fund with after-tax dollars. The money you contribute goes into your account and continues to grow without you having to pay any tax related costs. In other words, when the time comes for you to make a withdrawal, every cent you take out goes back into your wallet.

Part of what makes Roth IRAs so appealing is its tax-friendly quality. But there are 3 major benefits of a Roth IRA:

• You can contribute money regardless of your age and for as long as you like

• You can leave the money in the account without having to make minimum monthly withdrawals (something you must do with traditional IRAS)

• You can withdraw money whenever you want for any reason (but if you’re younger than 59½ you’ll face early withdrawal penalties unless you can prove you have a qualifying reason such as college tuition, medical expenses, or a first-time home purchase).

Thinking of starting a Roth IRA? If so you’ll need to make sure you meet these taxable income guidelines:

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