Roth IRA

WHAT IS A ROTH IRA?

It is an individual retirement account with special tax benefits. Your contributions are made with after-tax dollars, they grow tax-deferred and when you start withdrawing the money, it is TAX-FREE. Because it is an ACCOUNT, you can invest in whatever you like (mutual funds, stocks, bonds).

WHO CAN INVEST?

You can only contribute to or open a ROTH if you make less than $116,000 as a single person or $169,000 as a couple.

HOW MUCH CAN I CONTRIBUTE TO A ROTH IRA?

You are able to contribute up to $5,000 per year. If you are over 50, you can contribute up to $6,000.

CAN I OPEN A ROTH IRA EVEN IF I HAVE A 401k OR SEP?

Absolutely! However, you should maximize your 401k and SEP first, because with those plans you save money on your taxes, you are able to contribute more and chances are your company is matching (with the 401k). However, if you have maximized your 401k and SEP, definitely open a ROTH.

WHEN CAN I TOUCH THE MONEY PENALTY-FREE?

You are eligible to start withdrawing the money after age 59 1/2. If you need the money before that, you will be charged a 10% penalty only on ROTH earnings. Withdrawals of the principal are penalty free if it has been in the account for at least five years.

WHEN AM I REQUIRED TO START TAKING WITHDRAWALS?

That is one of the great benefits about a ROTH IRA. There is no age where you are required to begin taking withdrawals. With other IRAs and 401ks, you are required to start taking a minimum distribution at age 70 1/2, but there is no age limit with the ROTH.

WHAT IF I NEED THE MONEY BEFOREHAND?

That is another great things about the ROTH. If the principal has been in the account for at least five years, you don't pay any penalty. You also don't pay any penalty if it is used for a first home, qualified education expense or certain hardships.

THIS INFORMATION IS FOR INFORMATIONAL PURPSOSES ONLY AND SHOULD NOT BE TAKEN AS INVESTMENT OR TAX ADVICE. WHEN MAKING A DECISION ALWAYS CONSULT YOUR FINANCIAL PLANNER OR TAX PROFESSIONALS FIRST.

If you are not currently working with a financial advisor or think that your financial advisor could be working a bit better for you, we have excellent referrals that we work with on a regular basis.
Contact Us

BOOKSTORE
Our Bookstore includes books on starting your business, wealth creation and managing your time.
Bookstore

MOTIVATION
“Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos into order, confusion into clarity.... It turns problems into gifts, failures into success, the unexpected into perfect timing, and mistakes into important events. Gratitude makes sense of our past, brings peace for today and creates a vision for tomorrow.”
-Melodie Beattie
= = = = = = = = = = = = = = = = = = = = = = = = = =
Contact us today and we can set up an appointment.


MB Tax Professionals, LLP
Phone 503.595.5890 Fax 503.282.0513 2580
NW Upshur St. Portland, OR 97210
All rights reserved.