No doubt, one of the wisest money moves a taxpayer can make is to house his money in a Roth Individual Retirement Account. By simply following the rules stipulated by the IRS, any money you place in this retirement savings account will generate great Roth IRA returns – you’ll feel blessed as you allow your money to accumulate, or when you distribute your funds from your retirement account tax-free. In addition, an IRA is more versatile than a 401(k) account and other retirement savings plan since you are authorized to invest in your preferred assets, from mutual funds and stocks, to bonds and real estate properties.
Roth IRA Basics
If you still haven’t set up this exclusive gift from Uncle Sam, this is the right time for you to take advantage of the Roth IRA. You are given until the deadline of your tax return to establish and make allowed contributions for the previous tax year. The United States government places a limit on how much funds you can add to a Roth – for 2010, up to $5,000 if you are not more than 50 years of age, and an additional catch-up contribution of $1,000 is permitted if you are 50 years of age and older.
A useful Roth IRA advice to always remember is that if you wish to exceed the income limits of a Roth plan at some point during your working career and professional life, you must open a Roth IRA now while you are still active and young and you belong to the low-salary class to be eligible for this retirement plan.
Advantages
If the Roth’s versatility, savings power, and tax-free status are still not sufficient to encourage you to prepare for your retirement through this account, you should be aware of the few additional perks that make this retirement plan an indispensable option in any taxpayer’s financial life.
Through a Roth IRA, you can distribute your funds anytime without any penalty. Although it is most beneficial to keep your money in the account, it’s relieving to know that the Roth is just there ready to help you in case of emergencies.
