» 401k Retirement Plan Guides » Open Roth IRA Account

Open Roth IRA Account

Roth IRA provides many benefits to its users and most financial specialists consider it as one of the most advantageous investment opportunities ever offered to investors. In order to qualify for the opening of a Roth IRA account you should meet either of the following requirements:

  1. if you are single, your annual income should not be greater than $95,000
  2. if you are married, your annual income should not exceed $150,000

Roth IRA Contributions

Unfortunately there are limits up to which you can contribute to your Roth IRA account. They are annually set by the IRC. Contributions are after-tax dollars. The good news is that you can retrieve money from your Roth IRA account whenever you feel the need to without incurring whatsoever penalties, but only paying the regular income tax. However, you are completely exempt from taxes once you reach the age of 59 ½. These tax-free withdrawals are subject to the five year rule.

For example, if you decide to purchase shares valued to $20,000 of Coca Cola by using your Roth IRA account, after 20 years you will be able to sell these shares at a profit without incurring any tax burden and enjoy your high profits.

Roth IRA Advantages

Roth IRAs provide to their investors many advantages, which make them a preferred parking place by most entrepreneurs. For example, the contributions you make to your Roth IRA account can be used for the buying of whatever investments you like, be it CDs (certificates of deposits), bonds, stocks to name a few.

Furthermore, Roth IRA investors are not tied to any age regarding distribution. Roth IRAs are extremely beneficial for the unemployed since they can use the money to cover their medical insurance premiums. This is subject to the limitations that the unemployment status should be held for at least twelve weeks. Another benefit of Roth IRAs is again connected with medical expenses. Roth IRAs allow for the coverage of the excess 7.5% of your gross adjusted income.

Finally, Roth IRAs provide you with the opportunity of financing your, your spouse's or relatives' higher education expenses.

If you haven't still opened a Roth IRA account you should start thinking of doing it. Opening it is easy since it is offered by every brokerage firm.

Rate this article : Low
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5