A Roth Individual Retirement Account (Roth IRA) is a special kind of retirement account that is funded with cash you have already paid taxes on. By funding it with after-tax money, the money that accumulates will be free of taxes when it is time to withdrawal during your retirement. Roth IRAs are open to any age group; there is no minimum or maximum age requirement and like most retirement savings account, the earlier you get started, the larger your savings will grow.
Roth IRAs offer more flexibility than traditional IRAs or 401(k)s, as you are not obligated to make any withdrawals when you reach a certain age, and you can withdrawal money in case of a severe emergency without penalty or paying taxes on the cash. While a Roth IRA is a terrific option for those saving for retirement, not everyone is eligible to invest in a Roth IRA account. Roth IRA qualifications include:
Income-To qualify for a Roth IRA, your income through salaries or commissions must be less than $120,000 if you are single, are the head of the household, or living separately from your spouse. For married couples who file taxes jointly, income cannot exceed $176,000. Passive income, such as money earned through interest, does not .
For those under 50, you may only contribute up to $5,000 a year. After 50, you can contribute $6,000 a year.
Even if you have another retirement account like a company matched 401(k) or 403(b), you can still contribute the maximum amount into your Roth IRA account.
A Roth IRA is an excellent option for those looking to begin to invest in their retirement but who also want some flexibility with their money. If you qualify for a Roth IRA, contact a financial professional at an IRS-approved financial institution to find the best Roth IRA account available and get the piece of mind you need for your upcoming future.
