Posted on July 10, 2008. Filed under: -- Building Wealth, -- For The Investor In YOU, -- Money Help (in simple terms), -- Saving Money And YOU, -- YOUR Retirement | Tags: , , , , |

by Molly Greaves

Unlike a 401(k) you get no tax break on the dollars you put into the Roth, but you get to withdraw your money tax-free when you retire.  I think it’s a great hedge against higher taxes in the future. I dont know about you, but I only see them continuing to rise as the years go by. 

Also, a Roth IRA is just about the best financial gift you could ever give to your kids. 

Here’s why: Your assets in your Roth dont have to be tapped at any time during your lifetime, should you be so lucky, and when your kids inherit them, they can withdraw the money tax-free.

Compare that to a regular IRA. If you own this investment vehicle, you’ll have to start taking out distributions from the account starting April 1 of the year AFTER you turn 70 1/2, even if you dont need the money. And then, once your kids inherit the money, they will have to pay income taxes on the money when they take it out. So, they’ll end up with a LOT less. 

If you’re already seeking an employer’s full match, I would recommend putting the rest in the Roth until that is maxed out.  More to be added to this topic…much more.


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