Roth IRA

After investing in a 401k (if you are eligible) you should give serious consideration to making the maximum investment in a Roth IRA. The two main advantages of a Roth IRA are...

  1. Your Roth IRA contributions and earning can be withdrawn once you reach retirement age without paying tax.
  2. You can withdraw principle invested into your Roth IRA without incurring taxes or withdrawal penalties.

These two items make the Roth a unique investment. While the goal of the Roth IRA should be to save for retirement, each year you are building principle that you can tap should you find yourself in financial hard times.

Who is eligible

Your ability to contribute to a Roth begins to phase out at a modified adjusted gross income of 120,000 for single filers and $186,000 for joint filers, reaching the ineligible stage at $135,000 and $199,000, respectively.

How much can I contribute?

The 2018 max contribution limit for a Roth is $5,500 if you are 49 or younger. It is $6,500 if you are 50 or over.

When do I have to start withdrawing the money at retirement

You don't! With 401k and traditional IRA's, you must begin withdrawing funds by April of the year following the year in which you reach age 70 1/2. Roth IRA's have no withdrawal requirements.

For additional information on Roth IRA's