DISCOVER THE RETIREMENT BREAKTHROUGH ?THE ROTH IRA!
If you don't know what a Roth IRA is then stop everything, print this article and read it carefully as this will certainly be the most valuable information you read this year. This next retirement account is to your net worth what light bulb was to electricity. Let me tell you about this wonderful financial invention called a Roth IRA!The main difference between the Roth and traditional IRA is that with the Roth you pay taxes first and then make the contribution. This is absolutely fantastic if you make a lot of money in the stock market because you NEVER have to pay even a dime on the capital gains! There are a ton of other advantages to the Roth IRA. Unlike the traditional IRA you can be of any age and still contribute.
You can also make a contribution to a Roth IRA at any time for a particular calendar year up until the due date of your tax return for that year. This means that if you want to make a Roth IRA contribution for 2005, you could make it anytime between January 1, 2005 and April 15, 2006. Another nice feature of the Roth IRA is that your spouse will also qualify for a contribution. There is no tax deduction for Roth IRAs. Contributions are made with money that has already been taxed so there is no immediate tax break.
Don't fool yourself into thinking that this isn't the best thing since the wheel because when Roth money is taken out, it is a tax-free distribution! This type of IRA is ideal for individuals in a lower tax bracket now, but anticipate being in a higher tax bracket at retirement. In other words, if you are in a blue-collar or white-collar middle class family and are learning and practicing good savings and investment habits than this is your retirement life saver!It gets even better; you may make contributions at any age, even after you reach 70?. You must have your Roth account open for at least five years before you can take a penalty free distribution of earnings. Distributions of earnings without penalty can be taken after age 59?. If you are a first-time home buyer or become disabled, you can take distributions earlier.
You can also withdraw the contributions at any time penalty free as long as you don't withdraw investment earnings. What many people don't know who even have Roth is that they can withdraw the contribution for the account without penalty at any time as long as you don't touch any stock profits. If you exceed the income limits you can neither contribute to nor roll over other IRA money into a Roth account. If you opened a Roth while you were under the income limits but then later earn more, your Roth account still will earn money tax-free that you can take out later without tax implications, but no new contributions are allowed. Another absolutely incredible feature of the Roth IRA is that it is also judgment proof.
If you get sued it can be very hard for the lawyers to get it from you!.
ABOUT THE AUTHOR: Dr. Scott Brown, Ph.D., the Wallet Doctor, is a successful investor. Dr. Brown holds a Ph.D. in finance. The Wallet Doctor is sought after for investment advice and coaching. For more information visit Dr. Brown?s site at www.BonanzaBase.com or sign up for his investment tips at www.WalletDoctor.comRoth IRA
The Roth IRA (Individual Retirement Account), named after Senator William V. Roth, Jr., came into effect on January 1, 1998. A result of the Taxpayer Relief Act of 1997, the Roth IRA provides a benefit which is otherwise not available in any other form of retirement savings. If you meet the criteria and subscribe to the Roth IRA, all your savings will be tax-free when you or your beneficiary draws on them.
Another advantage is that you can also avoid the early distribution penalties, which you would otherwise have to pay with any other type of withdrawals.
The picture, however, is not all that rosy. This is because you don't get a deduction when you contribute to the Roth IRS.
But since you already paid the taxes for the money contributed to this account, you don't have to pay any at the time of withdrawal.
You need to meet certain eligibility criteria in order to contribute to the Roth IRA. One basic condition is that you should have earned...
Ira > Roth IRA
Retirement Savings Basics For a Secure Financial Future
The difference between an IRA and an ordinary investment account is that there are special tax advantages, but restrictions on the account apply. Individuals can only contribute up to $3000 per year to their IRA, or $3500 for people over fifty who want to jump start their retirement savings program. These limits are set to rise over the next few years, to $5000 in 2008, or $6000 for people over fifty. The contributions must be made from money which has been earned in the year the contribution is made. No tax is payable on the earnings from the investment as is grows, but the funds cannot be withdrawn until a certain age has been reached, usually fifty nine and six months, or penalties apply.A Roth IRA is a special type of account.
Contributions are not tax deductible, but investors can make tax free withdrawals after the age of fifty nine and six months, so long as the account has been established for more than five years. The basic difference between this type of account and...
Retirement Savings Basics For a Secure Financial Future
Ira > Retirement Savings Basics For a Secure Financial Future
Don?t Let Uncle Sam Take 80% of Your IRA
(ContentDesk) May 31, 2004 -- Could you lose over 80% of your IRA to taxes when you die? Yes, unless you act before it's too late. Read on to find out if this affects you and how you can minimize the effect of taxes on your IRA.You've worked hard all your life and enjoyed a successful career. Along the way, you've sacrificed to put money into retirement programs, building a nest egg to provide for you and your family the rest of your life. If you live just off the interest, you can leave a nice inheritance for your children.(Mr. Voudrie responds to questions from readers on an almost daily basis.
If you would like clear, straightforward, unbiased answers to your financial questions, contact e-mail protected from spam bots)Unfortunately, Uncle Sam could take over 80% of it in taxes, leaving your children with much less than you expected. If you owe estate taxes at your death and haven't planned properly, your children may be forced to tap into your retirement accounts. This could...
Don?t Let Uncle Sam Take 80% of Your IRA
Ira > Don?t Let Uncle Sam Take 80% of Your IRA