NEXT QUARTER CENTURY

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ROTH ACCOUNTS

  1. Tax efficient retirement account whose earnings grow tax-free but is NOT tax-deductible (the opposite of a traditional IRA which is tax-deductible but whose withdrawals ARE taxable.)

  2. Roth IRA is similar to a Health Savings Account except the Health Savings Account is tax-deductible.

  3. Principal contributions can be withdrawn at anytime without penalty. (Do not have to wait till 59.5 years of age.)

  4. Can withdraw up to $10000 of earnings from a Roth IRA to purchase a first principal residence.

  5. Earnings from a Roth IRA can be withdrawn tax-free after (both) turning age 59.5 AND being account opened 5 years. The latest age to start a Roth IRA and be able to access its earnings tax-free at age 59.5 would be to start the account by age 54.

  6. Can contribute to a Roth 401k -if offered- at any income level.

  7. Can contribute to a Roth IRA if income is below $135000 (single) or $199,000 (joint).

  8. Can contribute up to $5500 to a Roth IRA annually or $6500 if over age 50 but only if have earned income of that amount.

  9. Can convert a 401k or IRA to a Roth IRA at any income level. The converted amount is counted as ordinary income. Partial conversions are permitted.

  10. Roth IRA’s do NOT have to do RMD’s until they are inherited.