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Benefits of a Roth IRA
Too many people overlook the importance of saving now for retirement. What they don’t realize is that compounded interest makes the most difference when you start now, and that could mean having your wealth grow by millions. Denver accounting services can assist in identifying the key areas where you could be saving and investing to maximize your wealth. A Roth IRA is an Individual Retirement Account where contributions grow tax-free, and depending on your circumstances this could mean a substantial increase in retirement funds! The account can contain investments in stocks, bonds and/or mutual funds. The primary difference between a Roth and traditional IRA is that Roth IRAs are not tax deductible. For a withdrawal to be made without penalty, the owner must be at least 59 ½ years of age.
With a Roth IRA, money that is withdrawn is tax free after that age limit is met, or up to $10,000 can be withdrawn penalty-free if the money is being used for a first-time home purchase. Traditional IRA funds can be converted to a Roth IRA if income tax is paid on the amount being transferred. The maximum amount that can be contributed to a Roth IRA per year is $5,500 if under the age of 49, and $6,500 if older than 50. The amount can be reduced based on modified adjusted gross income. You are also not able to contribute more than the amount of income earned in that year.
There are seemingly limitless amounts of details when it comes to tax and retirement planning. We can provide information and advice on how best to manage your funds to maximize your savings. Contact a Denver accountant and let us handle the finances so you don’t have to worry!