William Roth created the Roth IRA in 1997 as a tax-free retirement investment. This investment will grow tax-free and can’t be taken out until you have reached 59 1/2 years of age. There are no RMDs (Required Minimum Distribution), so you can wait and let that money keep growing, even after you reach the minimum age to start taking money out. If you do this, you can keep making contributions up until 70 1/2 years old.
Some pros to a Roth IRA:
Earnings grow tax-free
Protected from creditors
Tax-free income in retirement
Transfer to spouse/heir without income tax
Some cons to a Roth IRA:
If you withdraw before 59 1/2 years, you pay income tax + a 10% or so penalty fee
Can’t be used as collateral/asset
Are you wondering if a Roth IRA is right for you? Meet with us and we can discuss different ways that Roth IRAs can be used with your funds, as well as assessing if you are fairly distributing your income to the correct tax areas to get the most benefit.
To learn more about Roth IRAs, read our corresponding article “Roth IRAs: Everything a Doctor Needs to Know Before Investing.”
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