Securing Your Financial Future With A Roth IRA
When you are considering your options for retirement investments, a Roth IRA is one of the more common possibilities you will encounter. This tax deferred
retirement savings account allows you to invest your money in stocks and bonds, generally through the use of mutual funds, or in other areas of investment. It provides a relatively low risk method of investing for your retirement and has tax advantages over other investment choices.
Differences From Traditional IRAs
A Roth IRA differs from traditional IRAs in a few ways, the main one being that there are generally fewer rules and restrictions applied to a Roth IRA. This is part of what makes them popular as a retirement account choice. A few of the advantages with the Roth IRA include the ability to make contributions to the Roth IRA even if you have a 401k, and a lack of requirements for withdrawals at a certain age. Roth IRAs can also be passed down to your heirs.
One of the disadvantages of a Roth IRA is that the contributions are not tax deductible, as they are with a traditional IRA. However, a Roth IRA, unlike traditional IRAs, allows for tax-free withdrawals under the appropriate circumstances. This tax difference means that although contribution limits are the same for both types, the effective contribution is higher with a Roth IRA.
Contributing To A Roth IRA
Much like traditional IRAs, a Roth IRA has a limit on contributions. Married couples can each contribute their limited amount to the Roth IRA each year. When it comes to making contributions, a Roth IRA is much the same as a traditional one, although your contributions will not be tax deductible.
Making the choice between a traditional and Roth IRA can be difficult for people new to investing; fortunately, your financial advisor can help you to make the right call. Today many insurance agents also provide financial services including Roth IRA investments, which means you can speak to the same person you already trust with your insurance needs to help you with retirement investments.
A Roth IRA can be a very useful investment tool to ensure you have the money you need for retirement and can also provide you with a legacy for your family, since they can be passed down to an heir. This makes them both an investment for you and an investment that allows you to provide money to a loved one when you are gone.