Maintaining a financial lifestyle you’re comfortable with during your retirement requires planning and commitment. The Roth IRA is one popular savings tool for securing this kind of lifestyle. This retirement account has several tax benefits that can help maximize income during your golden years. Here are answers to some of the most frequently asked questions about this popular retirement account.
Top Questions About Roth IRAs
1. What is a Roth IRA?
A Roth IRA is a savings account designed to grow a retirement nest egg. You make contributions to it on an after-tax basis. Once inside the account, your money grows tax-free until you reach retirement age. Even after you retire, you don’t have to pay taxes on your Roth IRA distributions.
2. What are the advantages?
In addition to the tax-free contributions and distributions mentioned above, you aren’t penalized for using the funds before retirement age. You won’t be assessed any taxes or penalties for early withdrawals. Roth IRA holders can also use their funds for any reason, and there are no required minimum distribution amounts.
3. Who can contribute to a Roth IRA?
Anyone can contribute to this type of retirement account, regardless of their age. However, you must regularly earn wages from a job or as an independent contractor. There are also IRS income limits on who is allowed to contribute. Since the limits may vary with each tax filing season, it’s best to speak to a financial adviser for personal guidance.
4. Is a Roth IRA or traditional IRA better for me?
The answer depends on the amount of income you earn, your tax bracket, and what your financial situation will be during retirement. Because no two individuals’ savings goals are alike and your personal money preferences are unique, a financial adviser can offer customized guidance on whether the Roth IRA or traditional IRA is best.
If boosting your retirement savings is your goal, Armstrong County Building & Loan Association can help you reach it. Based in Ford City, PA, the community lender has helped individuals by providing a variety of financial services since 1925. This includes Roth IRAs to grow your funds tax-free. To learn more about the account, call (724) 763-7137 to speak to a friendly representative. You can also get details online about the lender’s full suite of products and services.