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An important retirement method that everyone should be aware of is a Roth IRA. The Roth IRA is an individual retirement account that provides tax-free growth and withdrawals. 

The Roth IRA works by allowing your money to compound, like all investments in the stock market. The difference between this account and a standard investment account is the tax benefit. This means when you retire, your withdrawals will be tax-free. 

We do not recommend withdrawing from your ROTH IRA before you retire; you will be penalized with taxes on an early withdrawal unless you buy a home, birth or adoption fees, or college with the withdrawal money.

You can begin withdrawing your money from your IRA at the age of 59½. Before that age, it is considered an early withdrawal. 

 Now, you know what is a Roth IRA – YOU DID IT!!!

There are many benefits associated with a Roth IRA that includes:

-Tax-free distributions

– no age limit to open 

– no minimum

 -easy withdrawals (can withdrawal at any time without taxes or penalty) – double-dipping (can have both 401k and Roth)

-Flexible timing (you can choose when and how much you will contribute)

-Extra time to contribute (you have until the tax deadline to contribute for the previous calendar year)

Roth IRA Contribution Limits 2021

Roth IRA contribution can’t be more than $6,000 ($7,000 if you’re 50 or older).

Now, you know what is a Roth IRA – Let’s Learn How to Open a Roth IRA

 To open a Roth IRA, one must first figure out if they qualify. What qualify? Yes, you can’t make over a certain amount; let’s find out what the requirements are: 

If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $139,000 for the tax year 2020 and under $140,000 for the tax year 2021 to contribute to a Roth IRA, and if you’re married and file jointly, your MAGI must be under $206,000 for the tax year 2020 and 208,000 for the tax year 2021.

If you are like millions of Americans and me, we qualify. 

Your modified adjusted gross income (MAGI) is your adjusted gross income (AGI) after certain allowable deductions (like the student loan interest deduction and the child tax credit), and you can deduct tax penalities. 

For many taxpayers, the numbers are the same as your AGI. 

Next, you must decide on an investing preference. 

There are two that you can choose from. The “do-it-yourself” investor (choose a brokerage firm) open a ROTH IRA account and start investing. You create your portfolio with whatever you want to invest in, individual stocks, mutual funds, ETF’s, bonds, or a little bit of both. 

 For those who prefer to have someone else manage their Roth IRA, you can choose “the manage it for me” investor (choose a robo-advisor). With this option, a professional will pick an investment portfolio for you. Many use robo-advisors to provide online services that will build and maintain your portfolio, so you don’t have to handle it on your own

The next step is determining a provider to open your Roth IRA account, which differs based on your initial investing preference. Based on your needs will tell you which brokerage firm to consider.

Figure out the best brokers for you to use, by looking at their fees, investment reputation; look at their history of returns and please read reviews. Customer services matter to me and if it matters to you, find a firm with excellent customer service.

 Lastly, you must select your investments. What?

Many people tell people to invest but, they don’t make it clear how to invest? October 31st, you can learn from our free seminar on how to invest. CLICK HERE. 

Once you open a Roth IRA account, your money is not invested. It’s put in a savings account waiting for you to direct the money into investments. So, please open your account and invest your money.

Do not allow these steps to scare you because opening an account is simple. But, anything new will always seem harder than what it is. You deserve JOY & WEALTH, so go ahead and open your ROTH IRA today. 

To learn more about What Is Investing?, view our free seminar “What Is Investing?” with the amazing Ollen Douglass 

 

NOW, LET THE OFFICIAL “WHAT IS A ROTH IRA” PARTY BEGIN…

ROTH OVER HERE. ROTH OVER THERE.

 

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****We are not certified financial advisors. But, we are INVESTORS.  This is for information purposes only. Now, let the FINANCIAL PARTY continue…

 

 

 

 

Frankie Winborn

Author Frankie Winborn

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