Roth IRAs
There are many different options when it comes to planning for your retirement. Here at Peoples Bank & Trust we offer a large variety of plans to fit your individual needs. One of our most versatile plans is the Roth IRA. Learn how this account can benefit you and your loved ones when you retire.
6 Benefits to Starting a Roth IRA
Tax Free Income
With a Roth IRA you pay income tax on your contributions, and there are no additional taxes on withdrawals. There are also no taxes on earnings when you remove them from the account, simply pay tax on your income and then place the funds in your Roth IRA. As the finances grow, you never have to pay another penny of taxes on them.
You can continue to contribute funds after age 70
With the traditional IRA users must discontinue contributions at age 70 ½ and are then required to take distributions from the account. These distributions come with an associated tax for each withdrawal. The Roth IRA however, can gain contributions no matter your age, there is no age or limit to when, or if, you decide to take distributions. If you’re still earning an income and want to continue to save until you’re 100, the Roth IRA says go for it!
A Roth IRA can change as you need it
Roth IRA contributions can be withdrawn at any time penalty-free. In order to remove an amount more than what has been contributed, the investor must be over 59 ½ years old, with an active account for five years or more. There are some exceptions such as first-time home buying, disability, back taxes, or death.
The funds may be inherited
In planning your estate, a Roth IRA offers a tax-free opportunity for your beneficiaries to receive income that can extend throughout their life. Yes, you pay taxes on the contributions now, but when you or your heirs need the funds to use, no additional taxes are levied upon withdrawal.
High income families are still eligible
Typically larger income families are ineligible for a Roth IRA, and instead are only allowed to use the traditional IRA. There is a loophole however, since 2010 new regulations have stated that anyone who builds their funds through a traditional IRA is eligible to convert those funds to a Roth IRA. Since this process does take some maneuvering it is best to speak with your tax professional if you would like to switch from a traditional IRA.
Roth IRAs are an ideal option
By facing the taxes now, users are able to avoid paying them in the future when things may have changed. Adding the safety of a Roth IRA enables investors to plan for the future without the risk of any other expenses down the road. In fact, after compounding, and letting time continue to grow the funds, any earned interest becomes tax-free additional finances to use on top of the built contributions.
Peoples Bank & Trust, offers both Traditional and Roth IRAs in addition to other retirement options. Stop by your local branch today to get your retirement plans in motion.
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