Roth IRA

Until recently, a Roth IRA was only available to investors with taxable incomes less than about $105,000 per year. However, this restriction has been lifted. Now that a Roth IRA has no income restrictions, what other characteristics of this investment vehicle may make it a viable alternative?

The first consideration to consider is taxation. Money that you consider to a traditional IRA is tax deductable. However, when you withdraw your funds in the future, they are subject to taxation, and taxation at whatever rates happen to be at that time. Given the large budget deficits in the US, taxation may be higher in the future making this strategy risky.

In contract, contributions made to a Roth IRA are not tax deductable. However, when you begin to pull money out of the fund, your withdrawls are tax free.

In my opinion that's a huge benefit. What more could you want than some tax-free income in retirement? With a Roth IRA that dream is possible.

Money in a Roth IRA can be left in the account even after retirement. So at age 70 1/2, the traditional age where withdrawls are required, does not apply to Roth IRA's.
Read how a Roth IRA is different from a Traditional IRA

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