Planning your retirement is one of the most important decisions you can ever make regarding your financial future. Many people have questions about the different types of retirement accounts available and which plan is right for them. The money you invest in your Roth IRA grows tax-free. You will not have to pay taxes when you withdraw your retirement money.
So if your account grows hundreds of thousands of dollars over time, you won’t have to pay taxes when you withdraw that money in retirement. This is a huge benefit, especially for people who expect to be on a higher tax bracket when they retire.
Best Roth IRA Accounts Benefits:
Growth without taxes: Earnings are not subject to income tax as long as you have held the account for at least 5 years and you are at least 59 1/2.
Easy withdrawal process: Direct contributions can be withdrawn at any time, tax-free.
Multiple retirement accounts: A Roth IRA can also be set up if you have another retirement plan.
No minimum withdrawal requirements: There are no minimum distributions required like in a traditional IRA.
Inheritance Assets can be transferred to beneficiaries after death.
Roth IRA restrictions:
No tax deductions: Contributions are not tax deductible as they are in a traditional IRA.
Income limits on participation: You may not be eligible to in a Roth IRA if your income is above the income limits.
Early withdrawals: There is a 10% prepayment fee if you withdraw money before 59 1/2 without a qualified reason for school fees, first home, disability, medical bills, death, health insurance, etc.