Is Roth IRA for you?

It doesn’t matter at which point you’re at in your life you always have to think about the retirement

days. The world of finance is a maze of fancy words and procedures. If you don’t have a firm

understanding or a good enough guide you will surely get lost in it. With this article I will try to simplify

the terms and procedures when it comes to the Roth IRA pension plan. I could throw in fancy complex

words with ease but it’s not the point of this. So let’s get started with the subject.

There are many pensioning programs to run with just for the sake of example I would mention: private

pensions, traditional IRA, Roth IRA and etc. They all have their benefits and drawbacks so there isn’t one

which is good for anybody and everybody. You have to get into the nitty gritty and see which one offers

you the most benefits and the least drawbacks.

What do you need to know about the Roth IRA? It’s time for a bit of history first. It’s a fairly new pension

plan because it has only become active in 1997. The name Roth comes after the person who has

initiated this pension model. And this was made specifically for people who have low or mid-range

income. So before you get all you hopes up that you will be running with this pension plan make sure

you’re eligible for it. There are restrictions on who can apply and because of its benefits they are trying

to rule out people who would use it as a tax shelter.

In case you didn’t know the Roth IRA is tax deductible. But you will have to pay taxes when are getting

your money out. Also you don’t have to pay tax on the interest that you are getting over the years. This

is the main difference between the traditional IRA and this new one. With the traditional one you have

to pay taxes on your yearly revenue.

As for eligibility I’ve mentioned that this is aimed for low and mid income people. So if you’re earning up

to $100,000 then you can roll into the program. And for couples the income of them both should be up

to $160,000. If you’re above this limit you have to choose a different retirement plan. Also there’s a limit

on the amount of money you can deposit every year. If you are below 50 then your maximum

contribution can be $5,000. If you’re above 50 then your maximum contribution per year can be $6,000.

As a word of advice I would highly suggest that you contribute the maximum. So when the time comes

for you to retire you can enjoy the most of your yearly deposits. Let’s sum up what we have discussed in

this article. So first of all Roth IRA is for you if you’re a low to mid-ranged income level person. And your

yearly contribution is in the range of $5,000-$6,000. This contribution is tax deductible and also you

don’t have to pay taxes on your yearly revenue on this.