One day, everyone that is working will have to stop earning income through being employed. There comes a day when we will need to retire from our job, and reap all the fruits of our labors, whether it be because of health related issues or the fact that we are just tired of working. All of us would like to experience a comfortable and relaxing retirement. This is the main reason why people who are currently working are recommended to open an IRA, or individual retirement account, so they can start securing funds for the future. An IRA is one of the best options that you could choose for the future as this is an investment option which can hold several different types of investment accounts, making it easier for you to diversify your funds and create a more balanced investment portfolio. Some people prefer to open a Roth IRA, mostly because they believe in the tax advantages of this type of IRA plan. A Roth IRA is not a tax-deferred account (similar to traditional IRAs). This allows you to enjoy tax-free withdrawals later on during retirement. The contributions that are made to a Roth IRA are taxed right away. This means the investment choices will have a chance to grow tax-free profits as long as they are invested properly. Knowing the Roth IRA rules is essential so investors can get the best out of this investment vehicle. Contributions to your Roth IRA are limited. The standard contribution for Roth IRAs is a $5000 maximum per year. This applies to investors who are below the age of 50. The catch up contribution is a $6000 maximum per year, or an extra $1000. Catch up contributions are applicable for only those investors who are 50 years old and older. The max contribution limits of Roth IRAs are the same as with a Traditional IRA. In order to enjoy tax-free withdrawals from your Roth IRA in the future, the you must meet two required parameters: the holding period must be at least 5 years, and the minimum age requirement of at least 59 and 1/2 years old. Click here for more interesting articles and other tips.
Related Articles -
roth ira, ira, retirement, tax-free retirement, finance,
|