10 Reasons You Need a Roth IRA

1. Tax-free growth and withdrawals• Roth IRA

withdrawals in retirement are tax-free.

• Traditional IRA contributions can be tax-deductible now, but withdrawals in retirement are taxed as income.

flickr/ 401(k) 2012

2. No required minimum distributions

• Unlike traditional IRA accounts, which require withdrawals by age 70-½ , Roth IRA accounts don’t require you to take money out until you’re ready.

• Theoretically, you could let your money compound tax-free until you’re 100. Flickr/ Steven Dipolo

3. Leave your money to heirs tax-free• Roth IRAs can be

passed on to your heirs, who can take either a lump sum or periodic distributions tax-free.

• The account must be at least five years old to prevent heirs being taxed on the account’s gains.

Flickr/ steakpinball

4. Withdrawals not included in MAGI• When you withdraw from

a traditional IRA, the money counts in your modified adjusted gross income.

• Roth withdrawals don’t count in MAGI.

• This could help you stay in a lower tax bracket and help you avoid things like the Medicare surtax on investment income.

5. Withdraw your contributions at any time

• Unlike a traditional IRA or 401(k), you can withdraw your Roth IRA contributions (but not gains) tax- and penalty-free at any age, and for any reason.

• With other accounts, a 10% early-withdrawal penalty can be assessed. Flickr/ OTA photos

6. Contribute as long as you work

• You can make contributions to a Roth IRA so long as you have earned income, even if you’re past “retirement age.” Flickr/ kdothq

7. Take advantage of your lower tax bracket now

• If you’re young, chances are your income will rise over your working life, putting you in a higher tax bracket when you retire.

• Therefore, it could be to your advantage to pay tax on your income now and get tax-free withdrawals later, when you’re in a higher tax bracket.

Flickr/ 401(k) 2012

8. 16 months to contribute• You have until the tax

deadline (April 15) to contribute to your Roth IRA for the previous tax year.

• This benefit goes for all IRAs, but it’s worth knowing.

• So, if you’re starting late, you have extra time to maximize your 2014 contributions.

Flickr/ efile989

9. Income is not (really) a factor in eligibility

• While you need to earn less than a certain income amount to contribute directly to a Roth IRA, anyone can convert a traditional IRA to a Roth IRA at any time, regardless of income.

• Check out this article for full details on how to accomplish this.

10. Choices, choices, choices!• Unlike most

company-sponsored retirement plans, IRAs allow you to invest in virtually any stock, bond, or mutual fund.

• Some brokers will even let you use options and futures in your IRA accounts.

Wikipedia/ deerstop

How to boost your income in retirement