Roth IRAs are a excellent option for retirement savings, if you qualify.
Retirement saving can be daunting.
You know you need money to live in retirement.
You just may not know the best way to get there, as it can all be rather confusing.
According to a recent Investopedia article titled “Roth IRA Contribution Rules: The Basics,” a Roth IRA is a beneficial tool.
It is a case of delayed gratification.
There are qualifications you must meet to contribute to a Roth IRA.
Right out of the chute, you will need to be earning an income.
The, if your income is too high, a Roth IRA will not be an option.
On the bright side, if you qualify, you can contribute a Roth IRA at any age.
You cannot have a joint Roth IRA account.
Interestingly, however, it is possible to make contributions to an account opened for a non-working spouse.
What is the maximum contribution you can make in a year?
In 2018, the amount is $5,500 for those under age 50.
If you are 50 or older, you can contribute up to $6,500.
The contributions are phased out as the Adjusted Gross Income increases.
What are some benefits of a Roth IRA?
Your money will grow tax free and any withdrawals will also be exempt from taxes.
There are a number of ways to use a Roth IRA.
You can make contributions from a taxable retirement account without being counted against the contribution limit.
Your contribution may still be decreased because the amounts taken from your traditional account may change your adjusted gross income.
You can also rollover from one Roth IRA to another without incurring contributions.
Although you do not have to report your contributions on your federal tax return, you can may want to keep records of your contributions.
This can be helpful in providing proof of five years of contributions.
Only after five years can your withdrawals be taken tax-free.
Work with an experienced financial planner to determine whether a Roth IRA will be a beneficial tool for you and your loved ones.
Reference: Investopedia “Roth IRA Contribution Rules: The Basics”