Why Contribute to a Roth IRA?
Thinking about opening or contributing to a Roth IRA? Learn more about the benefits of this type of retirement account and if you may be eligible to contribute.
The key benefits of Roth IRAs include:
All distributions from the account can be tax-free – Although contributions to a Roth IRA are not tax-deductible, earnings grow free of taxes. When you reach age 59 1/2, if the Roth IRA has been in place for at least five years, any withdrawal is tax-free. This feature can be attractive––particularly for investors who anticipate having a higher marginal income tax rate than they do at the time of contribution.
No required minimum distributions – While distributions from a traditional IRA must begin upon reaching age 72, there are no similar requirements for a Roth IRA.
No age limit on contributions – You can continue contributing to a Roth IRA as long as you have earned income.
Know your limits – Eligibility to contribute to a Roth IRA is based on an individual’s modified adjusted growth income (AGI) and annual contribution limits are determined each calendar year. For 2020, the annual limit is $6,000 and those over age 50 can contribute an additional $1,000.
The professionals at TFCU Financial Advisors can answer questions you may have about the features and benefits of IRAs and help determine which type may be appropriate for addressing your retirement needs.
TFCU Financial Advisors
6501 Tinker Diagonal, MWC