Should I open Roth IRA?

1. TAX FREE WITHDRAWLS

   Do you think taxes will be higher or lower when you Retire?

   The government’s responsibility to fund programs like Social Security, Medicare
   and the trillion dollar stimulus that was just given out lead many economists to think taxes are going to go up.

   Because most of us have been taught to put our money into accounts that defer taxes we are in a dangerous situation. When we Retire, all the money we saved can be taxed at a rate we have no control over.

   However, Roth IRA’s avoid this problem. By making contributions to the account after taxes have been taken from our check the interest accrued inside the Roth IRA is tax free upon retirement as long as you meet two rules:

 

• Must be the age of 59 ½
• Own the Roth Account for at least 5 years

 

 

2. Ability to Withdraw Money at Any Time

   Traditional Retirement Accounts restrict our ability to access our money. If emergencies happen, we are forced to follow the company’s procedure for accessing our money. They control how much of it we access, when we access it, and how often we access it.

Roth IRA’s allow us to have far more control over our money. Everything you put into the account can be withdrawn at any time for any reason without any penalties. The only way to pay a penalty on the Roth IRA is by withdrawing the interest earned.

Even that part can be withdrawn without penalty for certain qualifying reasons. Roth IRAs give you a measure of control that you do not have in traditional retirement accounts.

3. MORE OPTIONS

   A major con to 401k’s and 403b’s is that the investment options are limited.

With a Roth IRA’s the  investments that you can place inside of it are unlimited. You can invest in a host of different index funds, Real estate, fixed annuities etc.

If your employer offers a 401K or  403b  Match then it usually makes since  to take advantage of the match first since it’s free money. If not, then it could be better to put your money in a Roth first. 

4. PORTABLE

The average person today will change jobs 5 to 7 times in their working career.  When most people change jobs they forget about the old 401K and their money is no longer being watched meaning they could lose money in the stock market or their money could be placed into a holding account that’s not growing.

Since Roth IRA’s are not connected to your job, your contributions are not interrupted by your change in employment. As a result you can simply continue to contribute to them no matter where go. Portability prevents you from having to relearn new strategies,401K options and fee structures every time you change employers.