Advantages of Roth IRA
(1) One can make contributions to
Roth IRA at any stage, as long as the taxpayer has earned income.
(2) At any time, the Roth IRA owner may withdraw
up to the total of his contributions.
(3) Contributions are made only from earned
income that has already been taxed (and are not tax deductible) hence
you do not need to pay taxes when withdrawals are made during retirement.
(4) If one plans to use the money to acquire
a principal residence, earnings withdrawals upto $10,000 are considered
qualified. The house must be acquired by the IRA owner,
their spouse, or their lineal ancestors and descendents. Also, the owner
or qualified relative who receives this "first time homeowner"
distribution must not have owned a home in the previous 24 months.
(5) In case the Roth IRA owner dies, the
qualified distributions are also available to other beneficiaries. If
the spouse is the sole beneficiary and he or she also owns a Roth IRA
account, the surviving spouse may combine the two Roth IRAs into a single
account without penalty.
(6) Another big advantage of the Roth IRA
is its lack of forced distributions based on age. Most tax-deferred retirement
plans require withdrawals to begin at age 70½ unlike roth IRA where
withdrawals can be made at 59½ years of age. |
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