A Tax Advantage Retirement Plan
A Roth IRA (Individual Retirement Arrangement) is a retirement plan under United States law that is not typically taxed, provided that certain conditions are met under this unique plan. This is the retirement plan that, even at my 31 years of age, I have been told again and against that I need to invest is. Is it the right plan for me? I am what you can consider financially stupid. I have never been someone who has learned how to invest – I have a savings account in which I keep at least three months worth of bills saved up in case the worst should happen but beyond that I honestly do not have a clue as to what I should be doing with my money.
An Individual Retirement Arrangement can be an individual retirement account containing a portfolio of investments in securities, usually common stocks and bonds, often through a mutual fund. The main advantage of this sort of retirement plan is that there are fewer restrictions on the investments that can be made than most other tax advantaged (tax free) plans, which has helped it’s popularity over the years. Of course, most of us who are considering investing or planning for our retirement are more than happy to hear about anything that’s tax free!
The differences between a Roth and traditional IRA is that contributions to the Roth plan are not tax-deductible. You’ll find that withdrawing from your IRA are going to be generally free of any additional tax; of course not without certain stipulations concerning the age of the individual. Simply put; the primary advantage of your Roth is that there are going to be fewer restrictions on when you can withdraw the money you’ve invested into the portfolio while avoiding tax liability. You can even make contributions despite having a 401k plan, too, which can be a huge help for those reaching retirement age and find themselves suddenly beset by financial difficulties.