Well, you are about to read a good article that I have written on how to make a sound long term investment. I did some thorough research on Roth IRA and found these interesting points. Hope it sounds beneficial to you.

Earnings are completely tax free: Roth IRA will offer you something that no other retirement plan can offer. It has the ability to withdraw your earnings without paying taxes on it. When you decide to cash out on your retirement plan, you will earn all the money that you put on the investment plus the interests you have accrued all these years and it’s completely tax free.

Better than Mill IRA: In Roth IRA, the maximum that you can contribute is $4,000 annually. It is going to be raised to $5,000 in 2008 to account for inflation. The only drawback is that there is no tax deduction for your contributions. As long as you are interested to maximize your contributions, Roth IRA is a good choice for most investors. You get more leverage while filing taxes to your retirement savings. The only thing that you need to do is to stick to the plan to enjoy the maximum benefits.

Flexibility: Roth IRA is very flexible. There are different ways to utilize your investment. IRS will allow a $10,000 withdrawal from your Roth IRA if you are going to purchase a home for the first time. You can also apply your investment in Roth IRA for educational purposes. And if you are in a hard situation, you can withdraw the maximum permissible amount anytime without having to pay back like it happens in case of 401(k). But be aware that you might catch some minor penalties when you withdraw from your investment in Roth IRA.

There is no rule on minimum distribution: if you are old and retired and have other sources of income, you don’t have any restrictions from cashing out from your Roth IRA. You can always sit back and see your tax free investment growing each year.

This entry was posted on Sunday, May 11th, 2008 at 3:52 am and is filed under Investment. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.