Roth a Smart Investment, The Sooner, the Better

Most of us have much more money in pre-tax retirement savings plans than we do in after-tax Roth plans. Why? Because Roth 457(b), 401(k) and 403(b) plans have only been around for about 10 years.

Regardless of age, every person should have a Roth IRA. A Roth IRA is funded with after-tax dollars, therefore, those after-tax contributions may be withdrawn at any time, at any age and for any reason. Moreover, once the Roth IRA has been opened for five years (year one starts on Jan. 1 in the year the account was established) the earnings may also be withdrawn tax-free, so long as the owner of the account has attained age 59½. Additionally, Roth IRAs are not subject to Required Minimum Distributions (RMD). Moreover, the Roth IRA owner need not make any withdrawals during his or her lifetime. Additionally, beneficiaries of inherited Roth IRAs continue to enjoy tax-free withdrawal of earnings. As Jackie Gleason would say, “how sweet it is!”