Roth IRA Definition

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Many Americans don’t plan for retirement because they are unsure of how to. Learning how to distinguish between the different types of retirement planning options, like a Roth IRA will help you choose a plan that fits your needs.

 

 

One type of retirement plan is a Roth IRA. Similar to other individual retirement plan accounts, money invested in a Roth IRA grows tax free. Other characteristics of a Roth include:

  • Contributions can continue even after age 70.5, as long as the contributor has earned income
  • The taxpayer can maintain the Roth IRA indefinitely; there is no required minimum distribution
  • Eligibility for a Roth account depends on income

 

A Roth IRA must be established with institutions that have IRS approval such as banks, brokerage companies, and Advisor Firms such as Advantage Retirement Services.

 

It is imperative that you take the time to look for Advisors that will meet your needs because not all financial institutions will have the same amount of investment options. Depending on the type of investments you want in your account will help determine what type of institution you will choose to use.

 

Quick Facts

 

The compensation that is eligible to fund Roth IRA’s includes any amount shown on an individual’s W-2 Form.

 

Contribution to a Roth IRA has a cap of $5,500 annually. Individuals 50 and over are able to make catch-up contributions of an extra $1,000 on top of original cap to make up for lost years of investing.

 

A Roth IRA can be funded from several sources including regular contributions, spousal IRA contributions, transfers, conversions, recharacterizations, and rollover contributions.

 

Depending on the tax bracket of the filer, a Roth IRA may be more beneficial than a traditional IRA.

 

Those individuals in a higher tax bracket after retirement may find the Roth IRA more advantageous since the total tax avoided in retirement will be greater than the income tax paid on the contribution amount in the present.

 

Younger and lower-income workers benefit the most from Roth IRA’s because saving early in life creates the snowball effect known as compound interest.

 

Your investment and earnings are reinvested continually to generate more revenue, which continues to reinvest itself for even more money.

 

Consultation

 

Investing in a Roth IRA is one of many options to choose from when deciding on how to save for the future.

 

The team at Advantage Retirement Services can help you determine if a Roth IRA is the best option for you, and if not, then they can help develop the best financial plan for you based on your needs.

 

With retirement planning, asset protection, tax planning, and probate, among other options offered by Advantage Retirement Services, planning for the future can be exciting.

 

For more information about financial planning services offered at Advantage Retirement Services, contact the team at (417) 893-7233, or visit our contact page for more information.

 

 

 

 

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