Benefits of The Roth IRA Retirement Plan

September 2, 2018
Posted in Insights
September 2, 2018 DCT Capital Fund

Roth IRA’s have an overwhelming number of advantages and can be a handy tool for growing retirement funds over a long period of time. Unfortunately, many people don’t know the information and others are intimidated by the complexity of it all. The truth that many people aren’t aware of initially is that setting up a Roth IRA account is quite simple. So, what exactly is a Roth IRA and what is the difference between a regular IRA and a Roth IRA? These kinds of questions are often the ones that stump most people while others merely don’t plan for the future.

Establish Goals

It may be worthwhile to establish retirement goals ahead of time. Depending on many different factors such as, financial stability post-retirement, and specific goals like providing funds for an heir; the approach of what is the best way to plan for retirement may vary from person to person.

Roth IRA’s are unique in the sense that they provide withdrawals on a tax-free basis. Roth IRA’s can come in handy and provide situational bonuses. For example, say that someone is looking to offer assets to their heir. In the case where the proceeds have grown via a Roth IRA account, then the funds will not have a penalty.

Overall the consensus has been positive and has grown in popularity as a result. It’s difficult to question the effectiveness of a Roth IRA retirement plan based on so many results. So, what exactly is a Roth IRA plan? Well, in short, they are quite like regular IRA’s, only with a few key differences.

One difference is that Roth IRA’s earnings are non-taxable as long as you meet specific requirements. Also, the income earned from possessing a traditional IRA doesn’t affect your contributions limits while a Roth IRA’s can. One beneficial difference with Roth IRA’s is that they don’t require you to take distributions when reaching the age of 70 and instead gives the freedom of choice.

People pick Roth IRA’s often due to the beneficial differences they offer. For instance, with Roth IRA’s people are free to take assets out of their plans without having to worry about the fear of taxes or penalties being over their shoulders. Roth IRAs are incredibly advantageous to be used to pay for various costs like a family members education or put money down on a new home without having the headache of different IRS penalties.

With traditional IRAs, investors are forced to take out money regardless of if they need it or not. This is not the case with Roth IRA’s that have no restrictions based on age. As long as money is left in the account for at least 5 years, there will be no penalties applied.