| June 19, 2013 | 0 Comments


Think of a Roth IRA as a long-term savings/investment account that you can add to annually or withdraw from when needed.  There is no penalty or tax when withdrawing your contributions.

The funds you earn on this account are tax free if the account is open for at least five years and you are at least 59-1/2 when you withdraw the funds.

There is no mandatory withdrawals at age 70-1/2 on Roth accounts to be taxed.

These accounts can give you retirement income tax-free and/or can give your heirs tax free income.  When inheriting traditional IRA’s income tax is paid on the inheritance.  Roth IRA’s are tax free and can grow tax free for generations.

One of the keys to contributing to a Roth IRA is that your annual contributions are limited (up to $5,500. in 2013 or $6500.if you are over 50 years old)  and you earn less than $112,000. as a single or $178,000. jointly.  The annual contribution gradually decreases if you earn more.  However, a contribution can still be made.  You can contribute to this account annually as long as you are working.  There is NO AGE LIMIT.

Since the withdrawals are not taxed, these withdrawals are exempt from taxes paid on Social Security benefits.  This is not the case when withdrawing funds from a traditional IRA.

If you are currently in a 401-K progam at your place of employment, check with your HR Department about converting a portion of you account to a Roth 401-K.  You can contribute up to $17,500 this year and $23,000. if you are 50 or older.

When you roll over a portion of your traditional IRA to a Roth that portion becomes taxable in the year of transfer.  If you think your tax rate will be higher when you retire (good possibility) then transferring a portion annually to a Roth IRA makes sense.

Opening a Roth IRA for your children or grandchildren is a way to help them in the long term.  THINK how this account could help your grandchildren over their lifetime.

Talk to your financial advisor about setting up a Roth IRA.  There is no minimum amount needed to open up a Roth IRA; just a maximum annual amount to contribute.  Many investment firms do not charge additional fees depending on your total amounts invested with their firm.

Please call me if you have additional questions.





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