Starting a Roth IRA is a great first step in saving for your financial future. The Roth IRA is one of the most widely used retirement savings tools. Although Roth IRA accounts are common they may not be for you. Only a wealth manager can suggest a plan that will fit your needs, goals and lifestyle. They can explain how complex financial tools like IRAs, Roth IRAs, and 401 (k)s work.
Different plans have different stipulations when it comes to taxation, inheritance, adding to the plan, and penalties. One the main difference, for example, between a Roth IRA and a traditional IRA is that traditional IRA contributions are tax deductible while in a Roth IRA withdrawals are tax free.* Roth IRAs can be inherited by spouses or other family members with no penalties while traditional IRA transfer can lead to taxation.
Some people fair better with an independent portfolio of investments and savings. This option represents the most freedom though it doesn’t have any of the tax exemption and perks of government plans.
Too many people blindly pay into employer sponsored programs without reading the fine print. Making the right decision now means every penny you save (or choose to withdraw) is taxed at a minimum and works its hardest for you.
*The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 may result in a 10% penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
