Shhhhhhhh…..can you hear that….that’s right baby it’s the Roth IRA Movement. So here is how the movement got started; Jeff Rose went to speak at his alma mater and polled the soon-to-be graduating seniors, and not a single one of them raised their hand when he asked if they heard of the Roth IRA. Here we are today a group of about 150 bloggers preaching to the nation and hoping they listen. For my friends following along on twitter it’s: #RothIRAMovement
In case you were one of the ones polled, here is what a Roth IRA is: The Roth IRA is a retirement investment vehicle where the premiums that are invested are after tax. This means that when you are ready to take the distributions that they are not taxed. The money that you invest can be invested in stocks, bonds, mutual funds, CD’s and even real estate.
There are annual contribution limits for the Roth IRA: For 2012 they are $5,000 and if you are over 50 you can contribute up to $6,000 assuming you fall below the income limits. You may also qualify for catch up contributions as well, be sure to talk to your financial advisor for more details. The income guidelines for 2012 are referenced below:
•Single or head of household: you must earn less than $111,000 to fully contribute to a Roth IRA
•Married filing jointly or a qualified widow: you must earn less than $173,000 to fully contribute to a Roth IRA
•Married filing separately: you must earn less than $10,000 to fully contribute to a Roth IRA.
The number one reason why I love the Roth IRA is the flexibility. As an adult in my late 20’s, I am looking for flexibility in my investment portfolio and the Roth IRA delivers just what I need. The Roth IRA is flexible if you need to take a distribution to purchase a house…no problem. The Roth IRA will allow you to save for the kiddie’s college fund…no problem! You can withdraw your contributions at any time with little restriction, and you don’t have to pay it back like a 401k and there is no penalty! After you have had your account open for 5 years you can access the earnings without paying tax if your situation fits one of the “qualified” reasons. The Roth IRA allows me to save but also have the ability to tap the money should I ever need it.
I hope to be living the lavish life when I retire and the great thing about this little retirement product, I won’t have to worry about paying taxes on the distributions.
It is very important that even your little brother who just started delivering the paper start a Roth IRA. The great thing about the Roth IRA is that there are no age requirements to start an account, so he can!