What is a roth ira?
A Roth IRA is an individual retirement account started in 1997 to help ease strain on the social security system.
The Roth IRA shares many things in common with a traditional IRA. But there are a few main differences that you should be aware of when deciding which one is right for planning your retirement. Here are a few of them.
One of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.
Another main difference to consider is that the penalty free withdrawal allowances in the traditional IRA are very few and far between. And they are only allowed under very specific circumstances.
The Roth IRA is much more loose with the withdrawal allowances. After five years you are allowed to withdraw the funds contributed.
The loose rules of the Roth IRA account make it a perfect candidate for an emergency fund. After the seasoning period of 5 years, you can use the fund to cover any unexpected costs and expenses.
Whatever your circumstances are, you should consider these facts before opening a retirement account.
The Roth IRA shares many things in common with a traditional IRA. But there are a few main differences that you should be aware of when deciding which one is right for planning your retirement. Here are a few of them.
One of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.
Another main difference to consider is that the penalty free withdrawal allowances in the traditional IRA are very few and far between. And they are only allowed under very specific circumstances.
The Roth IRA is much more loose with the withdrawal allowances. After five years you are allowed to withdraw the funds contributed.
The loose rules of the Roth IRA account make it a perfect candidate for an emergency fund. After the seasoning period of 5 years, you can use the fund to cover any unexpected costs and expenses.
Whatever your circumstances are, you should consider these facts before opening a retirement account.
posted by Credit Counseling at
5:04 AM
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