Difference between revisions of "Roth IRA"
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"A Roth IRA is setup and funded by an individual; however, some employer/group plans can have Roth accounts. A Roth is unique in that it is funded with after-[[tax]] [[dollar]]s, meaning the individual does not deduct the contribution from that year’s [[income tax]]es. He or she pays income taxes on the dollars earned and then contributes to the Roth. The benefit of this account type is that the distributions at retirement age are 100% tax-free. No income tax is claimed from the distribution."<ref>http://survivalblog.com/guest-post-self-directing-your-retirement-sheltering-the-fruits-of-your-labor-by-will-lehr Accessed December 8, 2014</ref> | "A Roth IRA is setup and funded by an individual; however, some employer/group plans can have Roth accounts. A Roth is unique in that it is funded with after-[[tax]] [[dollar]]s, meaning the individual does not deduct the contribution from that year’s [[income tax]]es. He or she pays income taxes on the dollars earned and then contributes to the Roth. The benefit of this account type is that the distributions at retirement age are 100% tax-free. No income tax is claimed from the distribution."<ref>http://survivalblog.com/guest-post-self-directing-your-retirement-sheltering-the-fruits-of-your-labor-by-will-lehr Accessed December 8, 2014</ref> | ||
| − | Roth IRAs can be contain [[investment]]s in [[securities]], most often [[common stock]]s and [[ | + | Roth IRAs can be contain [[investment]]s in [[securities]], most often [[common stock]]s and [[bond]]s, typically through [[mutual fund]]s. Roth IRAs also, less commonly, allow other investments, including [[real estate]], [[derivative]]s, notes, [[certificates of deposit]], and are possible). Roth IRAs also allow [[annuity|annuities]] bought from a [[life insurance]] company. In addition, under Internal Code Section 408(m) |
| − | + | , both participant-directed accounts and IRAs '''cannot''' invest in collectibles, such as art, antiques, gems, coins, or alcoholic beverages, and they can invest in certain precious metals only if they meet specific requirements. | |
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==Further Reading== | ==Further Reading== | ||
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Revision as of 02:33, March 29, 2016
An Roth individual retirement arrangement (Roth IRA) is a personal savings plan which allows one to invest or set aside money for retirement, while offering deferred tax / tax advantages. [1] The Roth retirement plan under US law that is generally not taxed, as long as certain conditions are met. The US tax law allows reduction in tax on a limited amount of saving for retirement. Roth IRA's main difference from the majority of tax advantaged retirement plans is that, instead of granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement.
"A Roth IRA is setup and funded by an individual; however, some employer/group plans can have Roth accounts. A Roth is unique in that it is funded with after-tax dollars, meaning the individual does not deduct the contribution from that year’s income taxes. He or she pays income taxes on the dollars earned and then contributes to the Roth. The benefit of this account type is that the distributions at retirement age are 100% tax-free. No income tax is claimed from the distribution."[2]
Roth IRAs can be contain investments in securities, most often common stocks and bonds, typically through mutual funds. Roth IRAs also, less commonly, allow other investments, including real estate, derivatives, notes, certificates of deposit, and are possible). Roth IRAs also allow annuities bought from a life insurance company. In addition, under Internal Code Section 408(m) , both participant-directed accounts and IRAs cannot invest in collectibles, such as art, antiques, gems, coins, or alcoholic beverages, and they can invest in certain precious metals only if they meet specific requirements.
Further Reading
Bledsoe, John D. (1998). Roth to Riches: The Ordinary to Roth IRA handbook. Dallas, TX: Legacy Press. ISBN 0-9629114-1-0. OCLC 40158081.
Daryanani, Gobind (1998). Roth IRA Book: An Investor's Guide: Including a Personal Interview with Senator William V. Roth, Jr. (R-De), Chairman, U.S. Senate Finance Committee. Bernardsville, NJ: Digiqual Inc.. ISBN 0-9665398-1-8. OCLC 40340829.
Merritt, Steve (1998). All about the New IRA, Roth, Traditional, Educational: How to Cash in on the New Tax Law Changes. Melbourne, FL: Halyard Press. ISBN 1-887063-07-2. OCLC 39363078.
Slesnick, Twila (2007). IRAs, 401(k)s, & Other Retirement Plans: Taking Your Money Out, 8th, Berkeley, CA: Nolo. ISBN 978-1-4133-0696-5. OCLC 85162294.
Thomas, Kaye A. (2004). Fairmark Guide to the Roth IRA: Retirement Planning in Plain Language. Lisle, IL: Fairmark Press, Inc.. ISBN 0-9674981-0-4. OCLC 55048948.
Trock, Gary R. (1998). The Roth IRA Made Simple. Grifith, IN: Conquest Pub.. ISBN 0-9666227-0-7. OCLC 40641031.
External Links
- IRS Publication 590 (IRAs) (pdf)
- IRS ROTH IRA Publication 590
- http://survivalblog.com/letter-re-self-directed-ira/
- http://survivalblog.com/guest-post-self-directing-your-retirement-sheltering-the-fruits-of-your-labor-by-will-lehr/
- http://survivalblog.com/letter-re-self-directed-ira-article/
- Rothify Your 401(k) Forbes.com
- Humberto Cruz. "Traditional to Roth IRA conversions: Don’t be tripped up by tax implications", February 13, 2010.
References
