There are several ways to invest in different types of IRA accounts, but should you really opt for a Roth IRA account? Whether an investor is good at picking stocks or if the funds are in the wrong account, money can go to waste and opportunities can be lost. So is a Roth IRA account the right investment for you? Here are some words of wisdom from Yahoo Finance.
How To Invest in a Roth IRA Account Wisely
I think that, aside from the earned income tax credit, the Roth IRA may be the single greatest thing our government has done for low-income families since the end of the war on poverty, which at best, ended in a draw, with poverty possibly winning on points,” the ” Mad Money ” host said.
Although a Roth IRA is not tax deductible, individuals and married couples who are earning a low- to moderate-income can take advantage of an income tax credit. However, the amount depends on the recipient’s income, and the number of children, if any. Moreover, if you keep the funds in your Roth IRA Account, you don’t have to pay dividend tax.
Roth IRA Account | Is It For You?
If you still can’t decide which IRA account to get, it might be better to check your income first. Second, think about when you want to pay your income tax—whether it makes sense to pay it now or wait until after you retire. Paying your income tax is a much more complicated decision since it depends on your current situation.
It’s also important to consider if you think you will have a higher income by the time you retire. In addition, there is an income limit which depends on whether you file a joint or single Roth IRA account.
Whether it is a traditional or Roth IRA account, your contributions should not be more than the allowed amount of $5,500 for individuals below the age of 50 and $6,500 for those who are over 50 years old.
Unlike the traditional IRA account, a Roth IRA account has no penalty for withdrawals made after five years. And once you reach the age of 59 and a half, you can withdraw without penalty.
Why You Should Have A Roth IRA Account
— Evren Senol (@STLSOLD) September 12, 2017
The government gives low- to moderate-income families a chance to save for a better retirement. If you are in the low-to moderate-income bracket, a Roth IRA account may work for you due to several advantages such as an income tax credit and no dividend tax.
Lastly, there is no penalty for withdrawals after 5 years of consistent contribution, and once you reach the age of retirement, which is 59 and a half.
Watch this clip from Bible Money Matters for 10 reasons to love the Roth IRA:
In conclusion, the Roth IRA could be a great option for individuals and married couples who are earning low- to moderate-income granted the above are taken into consideration. Since there isn’t a required minimum amount that needs to be contributed, it can be very beneficial for those with limited money to invest. Saving for your retirement is made easier because there is no limitation on the amount you contribute. Plus, withdrawals made after five years have no penalty.
Are there more tips you can share about having a Roth IRA account? Share it with us in the comments section below!