Do you put a portion of your paycheck into savings? Does that savings account empty out when you see something amazing while you’re online shopping? When you have access to a bank account that offers quick, efficient transfers, it’s hard to save money for the future. That’s why it’s important to research account types that will keep your money safe (from yourself and others) and provide you with the funds you need when you grow old and gray. With that said, let’s talk about what Roth IRA’s are.
What Is A Roth IRA?
Everyone wants a piece of your earnings. Your Social Security and Medicare taxation is based on your income. Although, at the age of fifty nine and a half, you can withdraw your money without any penalties or taxes, so long as you’ve had the account for at least five years. Good deal, right?
You Choose When To Withdrawal
You may qualify for the “Retirement Savings Contribution Credit” or “Saver’s Credit” during tax season. It depends on your current income and how much you’ve contributed to your retirement account. However, if you do qualify, you’ll get a nice tax break. Who wouldn’t enjoy that every year?
Backdoor Roth IRA Conversion
Those who inherit your Roth IRA won’t have to pay income tax on their distributions, but they will have to abide by RMD’s or “required minimum distributions." Of course, your account has to be at least five years old for them to be able to access it.
You Can Invest In A Roth IRA And 401(K)
Roth IRAs offer a ton of options to pick from when investing. You can choose low-cost mutual funds, ETF’s (exchange-traded funds), or individual stocks, bonds, and funds from other companies. There’s a lot to think about, so research what you can, then speak with a financial advisor before making any moves.
You can create a retirement account at any age. Sometimes it takes a couple of decades before you can catch up with the bills that come with surviving day to day. Other times, you’re lucky enough to begin saving in your early twenties. No matter what kind of retirement account you choose, though, save your money for the future. You’ll thank yourself later on when you’re able to retire comfortably. With that said, we wish you luck with your future ventures and hope that your retirement earnings grow rapidly.