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Brennan Financial Services
14785 Preston Road, Suite 780
Dallas, TX 75254
Phone: 972-980-PLAN
Fax: 972-980-7859
info@brennanfinancialservices.com
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What Are Roth IRAs?
Roth IRAs are retirement plans that are designed to provide investors with another option to grow their money for retirement. They are funded through after-tax contributions, and the money grows tax-deferred while the funds are invested. If the Roth IRA owner has attained age 59 ½, AND the Roth IRA has been in place for at least 5 years, then the earnings may be withdrawn tax-free, in retirement years. Roth IRA accounts can be invested in most types of investment vehicles.
Investors can contribute the same amount in a Roth IRA as they can in a Traditional IRA, including the “catch-up” clauses. However, they cannot contribute the maximum amount to both Roth IRA and IRA accounts in the same year. Investors who have money already in Traditional IRA accounts can “convert” those assets to a Roth IRA if they choose. The amount converted to a Roth IRA is taxable as ordinary income. There are also ordinary income limits on this conversion, so please check with a CPA or tax advisor to see if you qualify before converting any or all of your Traditional IRA accounts.
Roth IRA accounts also don’t require mandatory withdrawals at age 70 ½. In fact, investors can contribute to a Roth IRA no-matter-what age. This provides an advantage to the many people who continue to work part-time throughout their retirement years.
Roth IRA accounts can be subject to penalties and taxes if withdrawn prior to age 59 ½. They may also be subject to state and/or local taxes.
When you are looking for ways to save taxes on investment income during your retirement years, Roth IRA accounts may be right for you.