Many people know of the 401k account, but how many people are aware of the exciting earning benefits that Roth Ira accounts offer? Named after former late senator William Roth, a Roth IRA account can act as a financial lifeboat as you waltz your way to retirement.
Roth IRA Basics
Here’s the breakdown:
1. $4,000 contribution limit for ‘06. $5,000 limit for ‘07
*Update: 2008 Contributions have been increased to $5,000
2. Can only deposit earned income into a Roth IRA account
3. Earnings grow TAX FREE until after the age of 59 1/2 (the time when you may withdraw the earnings)
4. Roth IRA retirement accounts is not tax-deductible.
5. Most choose to invest their Roth Savings in mutual funds and/or types of high-yielding accounts
6. Several penalties occur if withdrawals are greater than the set amount
7. Withdrawal penalty exemption if using the money to purchase a home
Roth IRA vs. Traditional Ira
It allows your earnings to grow TAX FREE. That means any home runs mutual fund investments, CDs, or annuities….You don’t get taxed on these gains. That should save you a lot of money if you’re investing for the long run. And why shouldn’t you!!!
If you would like to open a Roth IRA account, try Fidelity. It offers a high quality no fee Roth IRA. Another good choice is Bank of America.
To browse a comprehensive list of Roth IRA brokers, read my post on the best Roth IRA accounts.
Update: The deadline for your yearly Roth IRA contributions is April 15th.
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Most successful independent investors make their own investment decisions using cost-efficient online investing. There is no real reason to pay “full boat” commissions to brokers who simply take up your time and provide out-dated advice.
I couldn’t agree more. Sometimes I still wonder why I invest with Fidelity. It costs 4x as much as Zecco or Tradeking, and I make most decisions on my own….Maybe I’m too loyal