The Roth IRA (individual retirement account) is a very popular retirement investment in today’s economy. The Roth IRA was named after Senator Roth of Delaware. He was the leading senator in the push for individuals to have a solid way of saving for retirement.
The main benefit of this type of investment is that contributions made to it are not taxed upon withdrawal. Compare that to a traditional IRA where contributions are tax deductible upon investment but upon withdrawal are subject to tax.
Lets take a look at some of the advantages of opening a Roth IRA account:
After the age of 59 ½ you can take out money without being subject to taxation. As mentioned early you are taxed upon your initial contribution so all the money you have earned with interest is not taxable after you qualify for Roth IRA withdrawal.
The Roth IRA allows you to make whatever contributions you would like to it. Currently, a maximum of $5000 per/year or $6000 per/year if you are over the age of 50 ½. Most other traditional IRAs and retirement plans have stipulations based upon your employer.
You can take money out for a variety of reasons tax free without any Roth IRA fees. Those reasons include buying a new house, medical emergencies, or payment to the IRS.
Another benefit of the Roth over other retirement accounts is there is no age limitation upon contribution. You could start investing at any age you choose, whenever you choose.
The reasons listed above generally make the Roth IRA one of the best retirement investments you can make. The only way this would change is if the tax rate dropped considerable and you were not taxed heavily upon withdrawal. In this instance a Traditional IRA would be better because your initial contributions are tax deductible and the Roth IRA contributions are not.
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