Roth IRA

What is a Roth IRA?

A Roth IRA is one of the many investment vehicles available to investors that aim to save for retirement. One key bonus that Roth IRAs have is that they are tax favored. This means they are not taxable, which is advantageous because you would then get to keep more of your money.

What are other advantages to a Roth IRA?

One advantage of a Roth IRA is that you can continue to make contributions after age 70½ as long as you have earned income. Additionally, you do not have to start mandatory distributions due to age as one has to with Traditional IRAs. However, beneficiaries of Roth IRAs must take mandatory distributions.

Roth IRA withdrawals of contribution can be made at any point for any reason. These are also considered tax free and not subject to the 10% federal income tax penalty typically associated with withdrawals. In order to make a qualified tax-free and penalty-free distribution of earnings, the account must meet the five-year holding requirement and the account holder must be age 59½ or older. If your withdrawals do not meet this requirement, they are taxed as any other withdrawal with some exceptions that include: death, disability, unreimbursed medical expenses in excess of 10% of adjusted gross income, higher-education expenses the purchase of a first home ($10,000 lifetime cap) substantially equal periodic payments, and qualified reservist distributions.

To learn more about Roth IRAs, or to learn how you can qualify, click here. Or for personalized attention, call our office today at 201-342-3300. One of our associates will be happy to speak to you.