Al Harsar, CPA gives tips for tax-free retirement savings:
Saving for retirement is a no-brainer. But, wouldn’t you like to earn your retirement money on a tax-free basis? As a taxpayer, you have that option by using the benefits of a Roth IRA to save for your retirement. Here’s how it works:
- Contributions to a Roth can be made with after-tax dollars, the benefit being that you pay no taxes on the appreciation when you withdraw from the Roth IRAs in the future.
- There are no Required Minimum Distributions (RMDs) when you turn 70 ½, like there are for traditional IRAs. For 2016, a taxpayer can contribute up to $5,500 plus an additional $1,000 for those that are 50 years old or older. Contributions are subject to phase-outs based on Adjusted Gross Income limitations. Roth IRA contributions for 2015 can be made up until April 15,
- Direct contributions to a Roth IRA may be withdrawn tax and penalty-free at any time and any earnings may be withdrawn tax and penalty-free after 5 years if the owner is 59½. Additionally, rollover contributions that are converted before age 59½ and held in a Roth IRA may be withdrawn tax and penalty-free after 5 years.
- Finally, your Roth IRA can be passed on to your heirs.
So start saving now to enhance your retirement with one of the only investments that provides you with tax-free earnings…what are you waiting for?