The Roth IRA is unique among retirement plans. The most significant aspect of this retirement account is its potential for tax-free growth as opposed to merely tax-deferred. Your contribution is made with money that has already been taxed. However, earnings that stay in the account for at least five years and until you reach age 59½ are never taxed. Contributions can always be distributed tax- and penalty-free.
To determine if a Roth IRA is a good choice for you, you need to consider issues such as:
- Your tax bracket
- Your tax payment resources
- Social Security
- Higher-than-expected income (especially for those who work in commissioned jobs)
Benefits of a Roth IRA
- Earnings in a Roth IRA truly grow tax-free and qualified withdrawals are never taxed.
- Since there is no age 70 ½ mandatory distribution requirement, a Roth IRA may offer longer tax-advantaged compounding than does a traditional retirement plan.
- You will not face a mandatory lifetime withdrawal schedule as you would with a Traditional IRA. That means that you decide how much, if any, money you want to withdraw.
- You may continue to contribute to a Roth IRA as long as you have earned income, even beyond age 70½.
- Contributions can be withdrawn at any time without taxes or penalties.
What if you qualify for both a Traditional IRA and a Roth IRA?
If you qualify for both a Roth IRA and a tax-deductible Traditional IRA, consider the Roth IRA if you don’t need the tax deduction.
- You won’t have to take required minimum distributions when you reach age 70 ½. That means your heirs can benefit too – because the distributions are tax-free.
- You’ll be able to withdraw your contribution at any time without penalty or taxes.
Due to the power of tax-free compounding, the potential for growth with a Roth IRA could be substantial.
COUNTRY® Financial gives you a wide selection of investment options for your IRA, from choosing your own investments to having the professionals at COUNTRY Trust Bank invest your money for you.
Take a closer look at the options to see what might work for you or find a COUNTRY Financial representative near you to get personalized guidance in matching the right IRA and investment option for you.
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