Financial Wellness

How To Fast-Track Your Savings Goals With A Roth IRA

There are several options to choose from when it comes to saving for retirement. A 401(k) usually comes to mind. It’s definitely one of the easiest ways to save for retirement.

But have you heard about a Roth IRA account?

If you have…

Do you know how they work?

When used correctly, a Roth IRA is probably the most flexible investment tool you can use today.

Many investment newbies might get intimidated or discouraged whenever they see the words IRA. But a Roth IRA is different from a traditional IRA. It’s important for you to learn the difference between the two.

Here are some facts about your new best financial friend: the Roth IRA account.

What Are Roth IRAs?

Your traditional IRA is an investment account.

The majority of those with IRA accounts use them to prepare for retirement. But what makes the Roth IRA so different from the other retirement funds is its flexibility.

There are always rules and regulations to uphold. But the flexibility of a Roth IRA allows more freedom than other retirement plans.

For these reasons, the Roth IRA looks more appealing to investors. But if an investor needed to, all IRA plans can convert to withheld IRA accounts also.

These accounts enable investors to hold a fund for various purposes.

The best part is…

You get to decide!

The Roth IRA is good for retirement savings and other various investment needs.

A Tax Free Account

The Roth IRA offers a tax-free vehicle for your investing efforts and money. These retirement accounts have no age limit on contributions or boundaries.

This means that those over the age of 70 are not turned away from generating more deposits to their fund.

The only need is that participants have earned income. That’s money earned from a business or standard job.

Throughout the entire account’s life, the money is yours. This means the account holder can take out their funds at any moment. This is an option you have that’s protected against taxes and penalties too. The only restrictions on withdrawals are on the profit made on the account. But there’s no cap on the amount of money you can make!

After the investor turns 59.5 years old, you can withdrawal the entire account tax-free after five years in an active status.

Qualifying For A Roth IRA

The Internal Revenue Service mandates regulations for Roth IRA and enforces all its requirements.

This includes oversight of the qualified income levels and various investment options available to those with Roth plans.

A Roth IRA account is not offered at every tax bracket. There’s an income floor each account holder needs to meet.

Those who make a certain amount are eligible to open a Roth IRA. The max on income is what’s considered a limit. It doesn’t allow every person to open an account.

Individuals who file as single qualify for this program when they make less than $131,000 a year. Joint filers can qualify if they make less than $183,000 a year.

This is a great tool for people that make less money and struggle to start a retirement fund.

But good news!

You only need to put in $50 a month into your Roth IRA. So stop making the excuse that you don’t have enough money. Make room for it!

And a Roth IRA doesn’t have to be for retirement only!

There are certain uses that are eligible for tax free withdrawals after an active status of five years.

These uses include:

Medical expenses
A home down payment
Qualifying education.

As you can see…

A Roth IRA can help you with some of the biggest transactions you make in your life!

So don’t feel like you’re only limited to retirement savings with a Roth IRA.

Investment Options For Roth IRA Accounts

The investment options for each account includes:

Mutual funds
Securities
Bonds
Stocks

Accounts also have deferred options that cover investment holdings like horses and gold. Rare jewelry and real estate are other options you have.

Other investment areas in a Roth IRA are properties and derivatives.

Remember:

With a Roth IRA, you’re eligible to withdraw the same amount you already contributed. That withdrawal is tax and penalty-free. It doesn’t matter what the purpose is.

Having a Roth IRA for up to five years grants the owner penalty free withdrawals on the amount contributed.

Special Specs and Features of Roth IRAs

Contributions are still valid when account holders have 401(k) plans or other investment tools.

If a person who owns a Roth IRA passes away, the spouse receives complete ownership of the account. This occurs through beneficiary clauses.

The Roth IRA has a higher contribution limit than its counterpart, the traditional IRA.

Roth IRAs can also decrease taxes on estates. Estates need to qualify as large enough under property jurisdictions.

Roth IRAs do not affect the range of taxes governed on social security or its withholdings.

Account holders also have alternative assets to diversify their account with. These include fair market valuation. Oil and gas drilling partnerships; royalty programs and real estate are also covered.