We’re always ready and happy to help…first by making sure you know that there are tax and investment experts better suited to guide you through choosing your best path. We recommend meeting with an expert in one of those fields to decide what kind of IRA is right for you.
Annual IRA contribution limits apply, and early withdrawals are subject to tax penalties.
The Roth IRA allows you to contribute after-tax dollars with earnings growing tax free (depending on your income). You pay no taxes when you withdraw the money, provided you have had the account for at least five years and you’re 59 or older. In addition, you may withdraw without penalty, up to $10,000 for a first-time home purchase. Another Roth IRA benefit is that you don’t have to begin withdrawing money at age 70 1/2, unlike a traditional IRA.*
This amount is determined by the IRS and can be found here: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
Both Traditional and Roth IRAs provide tax breaks. But it’s a matter of timing when you get to claim them. Traditional IRA contributions are tax-deductible on both state and federal tax returns for the year you make the contribution; withdrawals in retirement are taxed at ordinary income tax rates. Roth IRAs provide no tax break for contributions, but earnings and withdrawals are generally tax-free. Please consult your tax professional or financial planner for further guidance.