What is a Roth IRA?

What is a Roth IRA?

Male: A Roth IRA is like an IRA and it grows tax free but you put the money in after you’ve paid taxes on it. They grow tax free and when you take the money out, you don’t have to pay any taxes. Roth IRA’s are great when you’re young and when you think you’re going to be on a higher tax bracket later on.

They’re even good if all you expect is for bracket creep due to inflation to push you into higher tax brackets, so for clients that qualify for a Roth IRA. We recommend funding the Roth IRA first and it will allow that money to grow tax-free. If you put $2,000.00 into a Roth IRA for six years, when you’re very very young, that can multiply into multi millions of dollars by the time you’re in retirement and that multi millions of dollars will be tax-free.

IRA’s have required minimum distributions, Roth IRA’s because there is no required minimum distribution can continue to grow and help fund the end of your retirement if you live to a 100 or beyond. The other genius about Roth IRA’s is that if you leave a Roth IRA as inheritance to someone who’s very young. They then have to start required minimum distributions but the required minimum distributions they have to start a very low because they’re young. They are based on their age, so if you leave a Roth IRA to a child, that gives them a tax free income stream their entire life and that’s a very good estate planning use of Roth IRA’s.


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