The Pros And Cons Of Roth IRA’S
A Roth IRA is an individual retirement plan that allows tax free growth. Here we will give you some pros and cons of having a Roth IRA.
PROS:
- You have already paid taxes on your contributions, so you can withdraw them anytime penalty and tax free.
- You can use up to $10,000 tax free if you are using the money to buy your primary residence.
- Conversion from a Traditional IRA can be done free of charge.
- Roth conversion funds can be withdrawn with no penalty. 5 years must have passed on the converted funds.
- You do not have to make decisions based on your age. If you do not need the money, you are able to leave it to your heirs.
CONS:
- Contributions are not tax deductible.
- Eligibility is based on income.
- Tax benefits may not be realized unless you live to withdraw your contributions.
- The rules that let you withdraw contributions tax free are always subject to changes by Congress.
Roth IRA eligibility is based on income. A taxpayer can contribute the maximum amount. Currently the maximum contribution amounts are $5,000. If you are 50 years or older, you can contribute $6,000.
As you can see, there are more pros to having a Roth IRA than there are cons. If you are looking for a good way to make the most of your investments, it is with a Roth IRA. Your money grows tax free for as long as you let it. When you get ready to retire, you do not want to have to worry how you are going to make ends meet. A Roth IRA is a great way to make sure you have the money you need for your future.