• Roth IRA Info

    Should you get a Roth IRA or not?

    It depends on your situation. For some people, a Roth IRA would be a wise decision - for others not so much.

    Here are two of the biggest reasons for considering this investment vehicle:


    #1) Tax benefits

    When you put in money to the Roth, you pay taxes immediately. With the standard IRA, you don’t pay until you take money out.

    So if the taxes go up (and they probably will) then you will benefit from this arrangement. Since taxes seemingly always go up, this means you will likely save money down the road.

    #2) Freedom

    Unlike many investment vehicles, it’s up to you to pay into the Roth IRA. You aren’t forced to like you are with other investment options.

    Also, you get to choose your own investments. Whether you want mutual funds or standard stocks, you have the potential for much higher earnings. With most investments, you simply have to accept whatever investment vehicle your company chooses for you.

    In addition, you aren’t forced to start withdrawing at a certain point, like you are with other vehicles. So you can let the money keep accumulating as long as you want.

    Here's more Roth IRA info:

    Who qualifies for the Roth?

    You have to meet certain criteria to be able to invest in it. For one thing, you have to have a job. And you have to choose a company to manage your investments for you.

    You also can’t go over $5,000 in contributions if you are under fifty. If you are over fifty, you can put in as much as $6,000.

    And you can only put money away if you make less than one hundred and ten thousand a year. Also, you cannot take out a dime until you’ve waited five years after you’ve put the money in.

    Make sure to talk to your tax advisor before you make any decisions - because these qualification criteria are subject to change (and probably will.)

    What are the disadvantages of the Roth?

    You can’t use the contributions to lower your income. This is because they are taxed just like you regular earnings. In other words, you can’t use your contributions to lower yourself into a different tax bracket and get savings.

    The other negative is that your employer doesn’t match your contributions. However, if you choose good investments you can more than make up for this loss.

    So who should get the Roth IRA?

    The Roth IRA is best for someone that wants more control over their investments. With a regular 401k, you pretty much have to invest in whatever your company wants you to.

    With the Roth IRA, however, you can put money in and take it out whenever you want. If you are financially savvy, this would be a great investment vehicle.



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