The Roth is part of the Taxpayer Relief Act of 1997 and you need to
meet certain requirements to use this type of retirement account.
There are some restrictions on who can open these accounts and the
amount of money that can be deposited each year, depending on your
income level.
Mutual funds can be made up of any combination of mutual funds, stocks,
bonds and even real estate. You do not have to report them to the IRS
that makes them attractive to investors. As long as you have
taxable income you can make contributions until you are 70. You can
leave your money in the Roth as long as you want. You can also
distribute the money to your heirs upon your death and it should be in
your will on how to divide the money.
The account can grow as long as you want there are no rules about when
you have to close the account. The money is tax free when you decide
to liquidate the account.
A Roth IRA allows you keep from paying higher taxes if the
government decides to raise taxes. If you have a Roth you can start to
remove your money and it is not considered taxable income.
This is a advantage over having all your income coming from social
security.
You can also reduce your estate taxes. You can pay the income up front
and this will lesson the size of your estate. This does not apply at
the state level.
Remember there are no mandatory payment requirements. You
can also leave the money to your heirs and it is tax free except for
inheritance tax if you pass away.
You should seriously look at all the figures and restrictions before you
make a
decision on moving your retirement money from one account to a Roth
IRA. Despite the tax advantages your decision should not be automatic
and be well thought out. |
