Our Top 5 Reasons to Open a Roth IRA

Virtus Wealth financial advisors > Our Top 5 Reasons to Open a Roth IRA

by | Feb 8, 2021

In this ever-changing world, finding a flexible investment retirement option can be challenging. But there is one retirement plan beloved by savers of all ages. And that plan is the Roth IRA.

This investment vehicle offers immeasurable benefits.

What makes it so special?

Well, today we are going to answer that question. While delivering concrete proof on why this might be a rewarding option for you. And begin steering your future towards easy living during your retirement. Sound good?

Let’s take a closer look.

Enjoy a tax-free retirement income

If you’re not familiar with the difference between a Traditional IRA (individual retirement account) and a Roth IRA here’s a snapshot of the most notable difference. It’s all about how taxes are handled.

The Traditional IRA gives you a tax-break immediately. All contributions may be deductible during the year they are deposited into the account. But… when you withdraw money out of your account in retirement, you pay your income taxes then. On every withdrawal distributed.

On the contrary, a Roth IRA is all about delayed gratification. What does this mean?

It means that you pay your taxes upfront. This is a massive benefit.

Why?

Because now your principal contributions and your earnings are all tax-free during your retirement!

Tax diversification during retirement is a large factor to consider. The Roth IRA is something that ensures you can have a tax-free income when it’s time to give up your career and retire.

Roth-IRAs Flexibility is Unsurpassed

When it comes to retirement plans, they are not usually known for their flexibility. Most times if you need to make a withdrawal outside of the plan guidelines you are heavily penalized.

That makes sense, your Roth IRA isn’t an emergency savings account. It’s for your retirement.

With that said, we’ve all hit a snag before (it happens). A Roth IRA gives you the freedom to withdraw your contributions with no penalty if you’re in a bit of a bind.

Again, it’s not recommended but it’s available to you none the less.

To find out more details on how this all works, Virtus Wealth Management can answer all the questions you may have, reach us at (817) 717-3812.

There are some circumstances where you can withdraw more than your contributions if you don’t fall within the age or holding requirements:

  1. Permanent disability
  2. Back Taxes
  3. Paying health insurance premiums while unemployed

How long do you want to contribute?

Ever heard of required minimum distributions? Or RMD for short?

Put simply, this means a holder of a Traditional IRA is required to begin withdrawing contributions from there account at age 70 ½. You heard that right, you are forced to start withdrawing your money and paying taxes no matter what. During the COVID-19 Pandemic the rules have changed and you are not required at this time to take your RMD.

What’s better?

The Roth IRA, because it has no required minimum distributions. Let that money pile up for along as you want. Compound interest and all. Here’s the best part, as long as you are earning an income you can contribute to your Roth IRA. There are no age restrictions.

That means:

  1. As a saver and investor, you can continue to allow your investments to grow tax-free
  2. Avoid selling investments at a poor financial margin, like with a Traditional IRA

Roth IRA’s Are for Everyone

We believe Roth IRAs are good for people of all ages. Whether you’re 20, or 45 you can get started. If you earn a living you can open a Roth IRA. Yes, starting early is always ideal, but does not define your retirement success.

The annual contribution is $6,000 in 2020 and if you’re 50 years of age or older you can contribute an additional $1,000 for a total annual contribution of $7,000.

Do you have a higher income than most?

Not to worry with a professional in your corner you too can take advantage of the stellar rewards a Roth IRA has to offer. With the Roth IRA, some income restrictions do apply.

Have more questions?

Speaking with Virtus Wealth Management and finding out how to take advantage of this dynamic retirement plan we feel is in your best interest. It’s understood dealing with your finances is a complex situation and unique.

With years of experience and being trusted to manage the delicate matters of money, Virtus Wealth Management uses a holistic approach to secure your financial future. Reach us at (817) 717-3812.

Prepay taxes for your heirs

Deciding to save for retirement is a big step. It means you care about your future. It can also represent how much you care about your family. The Roth IRA shines the brightest in this category.

Choosing to Open a Roth IRA means the IRS keeps their hands off your retirement. It also means unlike money left to a beneficiary in a Traditional IRA where the requisite is to pay taxes on distributions from an inherited account.

The Roth IRA’s withdrawals remain tax-free. As a smart and savvy investor, your ample account can leave your beneficiary a tax-free streamline of income over an extended period of time. Allowing you to pay it forward on taxes for your heirs.

This can be revered as an exceptional estate planning tool. Offering a tax-free head start for a lifetime depending on your early contributions. Think about that, and what it would mean for your family. A small decision to pay taxes of upfront today can make a monumental impact on the lives of your beneficiaries later.

A Roth IRA can do that.

It Boils Down to This

If you’re looking for a way to maximize your retirement and wave goodbye to a taxed income, the Roth IRA is a good choice. It’s extremely easy to open, and simple to get started.

The best way to get started is to contact an investment professional to help walk you through the process.

If you don’t have a financial professional Virtus Wealth Management would love to hear from you. With complimentary consultations, we look at the bigger picture to help bridge your understanding with your long-term goals.

So, what are you waiting for?

It’s time you begin planning your great retirement escape.


The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice.

A Roth IRA offers tax deferral on any earnings in the account.

Qualified withdrawals of earnings from the account are tax-free.

Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax.

Limitations and restrictions may apply.

This information is not intended to be a substitute for specific individualized tax or legal advice.

We suggest that you discuss your specific situation with a qualified tax or legal advisor.

 

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