Roth IRA FAQ

What is a Roth IRA and why should it be considered as the best individual retirement account available today? Here's some Roth IRA FAQ. Before this question is answered, it should be pointed out that with today’s economy in a state of flux; with the rising costs of fuel; with the stock market fluctuating from day to day; and, more importantly with baby boomers considering retirement soon or in the near future – needless to say having a back up plan for retirement is no longer an option.

You may have watched a prominent financial advisor on cable TV who, for many years, has advised her viewers to invest their savings into a Roth IRA. What is a Roth Individual Retirement Account? Basically it is an account which is non-deductible and for which withdrawals are tax-free after the money in the account is held for five years.

Who can open up a Roth IRA account? Anyone who receives income can contribute $2000 or a percentage of income earned up to 100%.

Are the earnings taxed? No, they are not. As a matter of fact, no tax deductions can be taken nor will you pay tax on the amount of money made in your account.

How do you qualify for a Roth Individual Retirement Account distribution? You have to keep the funds in your account for five years after which you can withdraw monies based on certain criteria: reach the age of 59½, monies can be withdrawn and paid to your beneficiary if you should die; if you become disabled and need additional funds; or you need to pay for a new home which, in this case, qualifies you to withdraw up to ten thousand dollars. 

Do you have to withdraw monies from your account at a specific age? No. Unlike other IRAs, the beauty of the Roth IRA is that you can keep your money in the account as long as you desire.

Where can I find out more information about a Roth IRA? Contact your bank or portfolio manager and meet with them to discuss opening an account. Ensure that you have your list of questions ready so that you fully understand how this particular account works.

Having a Roth IRA account will afford anyone the opportunity to begin contributing to their retirement at a young age. While most baby boomers are worried they will not have enough funds to see them through their retirement years, it may be a good idea to discuss a Roth IRA option with working members of your family.

While so many things in this world are uncertain and out of control, having a Roth IRA ensures that you can control any financial concerns that may arise and that you can look forward to retirement with a more assured position.