Is The Roth IRA Right For Me?

You may have heard a lot about the new Roth IRA, but perhaps you're still not sure if this new Individual Retirement Account is right for you.

For many Americans the answer is yes. The Roth IRA offers big incentives for eligible taxpayers* disciplined enough to put away cash for retirement. Just like the regular IRA, you can contribute up to $2,000 annually ($4,000 per married couple). As the years pass, no Federal Income Tax is due on the earnings.

Even when taking qualified distributions at retirement, taxes are not due provided the Roth is at least five years old and you are at least 59 1/2 years old. in contrast you will have to pay taxes, at your individual tax rate, when you withdraw the money from a traditional IRA. Please note, withdrawals from any IRA prior to age 59 1/2 may be subject to an irs penalty.

There is a trade off for this tax-free Roth IRA. Unlike with the traditional IRA, the annual contributions to a Roth IRA are not tax deductible.

The Roth IRA may not be suitable for everyone, however, depending on your situation the Roth IRA may offer outstanding tax benefits compared to a traditional IRA.

*Eligibility is based on income. Eligibility phase out begins at an adjusted gross income of $150,000 for couples filing jointly, and at $95,000 for singles.

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