Advantages
of Using a ROTH IRA
1.
No taxes are due on withdrawals from the account if the proceeds
are generated after the taxpayer reaches age 59 ½.
2.
The taxpayer does not have to take mandatory distributions from
the account at the age of 70 ½.
3.
Contributions can be made after the tax year ends. The deadline
to contribute is April 15th of the next year.
4.
A stay-at-home spouse can make contributions even if he or she
has no earned income.
5.
The Retirement Saver's Credit encourages retirement savings by
allowing a credit based upon a percentage of amounts contributed
to a Roth (or regular) IRA. This credit can be for an amount as
high as $1,000.
6.
Up to $10,000 can be withdrawn for a first-time homebuyer without
paying the early withdrawal penalty
7.
Up to $10,000 can be used for certain education and other expenses
without paying the early withdrawal penalty
Disadvantages
of Using a ROTH IRA
1.
Contributions cannot be used to offset taxable income (as with
a traditional IRA).
2.
There is a 10% early distribution penalty.
3.
Relatively low maximum contribution amount.
(This information is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, consult with your professional advisor.)
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