The Benefits of a Roth IRA
Unlike a Traditional IRA, contributions to a Roth IRA are made with after-tax dollars. This means you don't get a tax deduction now, but your withdrawals in retirement are completely tax-free.
This makes the Roth IRA particularly attractive for younger investors who expect to be in a higher tax bracket later in life, or for those who want to hedge against future tax increases.
Roth IRA Rules to Remember
- Contribution limits apply (check current IRS guidelines)
- Income limits may restrict your ability to contribute directly
- Earnings can be withdrawn tax-free after age 59½ and 5 years of account ownership