A good  retirement plan includes considering every possible savings vehicle and since 1997 Roth accounts have been added to many individual’s retirement plans. Why? Because Roth accounts owners enjoy the following benefits:

1. Fund your future – you can contribute up to $5,500 in 2018 as long as you make less than $116,000 (or $183,000 for married couples filing jointly). * If you are over 50, the contribution can be up to $6,500 per year.
   
   
   • Even if you contribute to a company retirement plan or a traditional IRA you can still contribute to your Roth.
     
     
2. Fatten your retirement coffers – Even though contributions aren’t tax deductible, the investments grow tax-free and can be withdrawn tax-free, as long as you follow the rules. That could mean you’ll have more income in retirement.
   
   
3. No age limit for contributions – As long as you have earned income, you can contribute to a Roth IRA, even after age 70 ½.
   
   
   • This feature makes it a retirement savings vehicle that teenagers with part -time job should consider. Most company retirement plans do not allow part-time employees to contribute to the plan so this is an opportunity for them to start saving for their retirement in their teenage years which could result in a noticeable impact on their retirement income!
     

     
     

4. No required distributions – Unlike traditional IRAs, a Roth doesn’t require minimum distributions (RMDs) after turning 70 ½ (however, a Roth will require RMDs after the death of the owner). RMDs typically count as taxable income. Since Roth IRAs don’t have RMDs, those assets can remain invested.
   
   
• A Roth can be a vehicle that helps manage your tax liability in retirement.
  
  
5. Benefit your heirs – This could potentially allow your accounts to keep growing before being passed to your heirs. Be sure to consult your estate planning team to determine if it makes sense to use a Roth as an inheritance vehicle.
   
   
6. Back up your down payment – As with traditional IRA, you can withdraw funds (up to a lifetime maximum of $10,000) penalty-free from your Roth IRA to make a down payment on your first-time home purchase, under certain circumstances.
   
   
• Young workers taking their first jobs right out of school will benefit most from this opportunity.
  
  
7. Your money is yours – This may sound odd but in a traditional IRA your earnings are taxed when they are withdrawn and if you withdraw money prior to turning 59 ½ you will have to pay taxes on all of the funds withdrawn regardless of age as well as an additional 10% penalty. Contributions to a Roth IRA may be withdrawn at any time for any reason without penalty or taxes. Only your earnings in a Roth are subject to restrictions on withdrawals.

To add a  Roth to your retirement plan, please contact me

By Debbie Craig CFP®, MBA, CRPS®

Branch Manager

*Withdrawals will become tax-free when you reach age 59 ½, if the Roth IRA has been in place for at least five years. Investing involves risk including the possible loss of principal.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.