For Capitol Region investors, a Roth IRA is an individual retirement account that offers a valuable future tax break: Tax-free income in retirement. Like beauty, the benefit of a Roth IRA is in the eye of the beholder and it all depends on the beholder’s tax bracket--both now and when he or she retires.
Flexibility at choosing that age of retirement is a crucial benefit:
- With a traditional IRA, investors must stop making contributions when they turn 70 1/2 years old, at which point they are forced to take distributions and begin paying taxes on that money.
- The Roth IRA has no required minimum distributions. That means you can live to 120 without ever tapping your Roth IRA.
- Anyone with earned income can keep adding to their Roth IRA account regardless of age.
- If you're earning an income at age 87 and want to save for the future, have at it: You can continue to contribute until you quit working or pass away, whichever comes first.
If you're still working, you can contribute.
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Dave Balog teaches financial essentials for families. 952-1257. email@example.com