A Roth IRA (Individual Retirement Account) is a unique type of IRA in the United States that is taxed when you put the money into the account and then the full amount is available to be withdrawn at retirement age. So when you put the money into the account it is taxed at that time, but as it grows with interest over time, when you withdraw the money, you are withdrawing the full amount that is in your account. There are certain restrictions to being able to take advantage of a Roth IRA account.
You must make under a certain amount to be able to take advantage of this type of Individual Retirement Account and there is a limit of $5,000 a year for people under the age of 50 and $6,000 a year for people over the age of 50.
Roth IRAs can be made up of different securities. They may include stocks and bonds, but most are comprised of mutual funds. You can discuss with your financial advisor which grouping of securities you want to be included in your Roth IRA. They must meet certain requirements of the US tax law in order to be allowed to be included in this special type of account.
It is never too early to begin saving for retirement and if you qualify for a Roth IRA it is an excellent idea to take advantage of it. You will save money by being taxed now on the amount you invest and not being taxed at retirement age when you withdraw your savings which will include the principle you invested plus the interest earned on the account.
It is a good idea to talk to your financial advisor to see if a Roth Individual Retirement Account is something that will add value to your retirement portfolio today.
