Seven Key Reasons to Consider a Roth IRA


Seven Key Reasons to Consider a Roth IRA

Roth IRAs provide a tax-advantaged haven for retirement savings, along with a number of other compelling benefits.

November 17, 2015

Taking responsibility to plan your financial future and fund the retirement you want starts with saving wisely. And that means understanding your options such as employee sponsored retirement plans and individual retirement accounts (IRAs). Each of these options come with different features and benefits. Below are seven reason why you may consider a Roth IRA as part of your retirement saving strategy.

1. Fund your future.

You can contribute up to $5,500 in 2015 as long as you make less than $116,000 (or $183,000 for married couples filing jointly).* If you’re over 50, the contribution can be up to $6,500 per year.

2. Fatten your retirement coffers.

Even though contributions aren’t tax deductible, the investments grow tax-free and can be withdrawn tax-free, as long as you follow the rules. That could mean you’ll have more income in retirement.

3. No age limit for contributions.

As long as you have earned income, you can contribute to a Roth IRA, even after age 70½. People are living longer than ever, and a Roth allows your investments to keep working for as long as you do.

4. No required distributions.

Unlike traditional IRAs and other retirement accounts, a Roth doesn’t require minimum distributions after turning 70½ (however, a Roth will require RMDs after the death of the owner). RMDs typically count as taxable income. Since Roth IRAs don’t have RMDs, those assets can remain invested.

5. Benefit your heirs.

This could potentially allow your accounts to keep growing before being passed to your heirs. Be sure to consult your estate planning team to determine if it makes sense to use a Roth as an inheritance vehicle.  

6. Back up for a down payment.

As with a traditional IRA, you can withdraw funds (up to a lifetime maximum of $10,000) penalty-free from your Roth IRA to make a down payment on a first-time home purchase, under certain circumstances.

7. Your money is yours.

You can take out any or all of your Roth IRA contributions at any time and for any reason, without taxes or penalties. Only your earnings are subject to restrictions on withdrawals.

Understanding the features and benefits of retirement savings vehicles can be crucial to achieving the future you’ve always imagined. Be sure to include your financial and tax advisors in the conversation.

*Withdrawals will become tax-free when you reach age 59½, if the Roth IRA has been in place for at least five years. Investing involves risk including the possible loss of principal.

View more

Back to Top

Four Reasons to Consider a Roth IRA
Four Reasons to Consider a Roth IRA READ READ

Risk Management Demystified
Risk Management Demystified READ READ

Social Security Basics
Social Security Basics READ READ