Retirement may be a long way off, but it is smart to start saving now to ensure a more comfortable life later on. There are many ways to save and invest your money outside of a 401K. One of the more notable ways to save for retirement is with a Roth IRA account. Here’s what you need to know about opening and maintaining a Roth IRA.
1. There is a yearly limit to the amount you can contribute to your account. Recently this limit has been set at $5,000, but the limit can change depending on inflation and the age of the account holder.
2. There is no minimum age for opening a Roth IRA; you just have to receive an income. This means you must actually receive compensation for work performed in order to open and contribute to the account. You cannot contribute payments from inheritance, alimony or other non-income forms of payment.
3. The Roth IRA does not need to be your sole retirement account. You can open and maintain your Roth IRA along with any money market accounts and your work-provided 401K or 403b plan.
4. You will not be able to withdraw any earnings from your Roth IRA until you are 59 ½ years-old. Should you need to withdraw sooner, you will most likely pay a 10% early withdrawal penalty on those funds. You can still be charged this penalty when you reach the 59 ½ age limit if your Roth IRA has been open for less than 5 years.
These are just a few basic rules to get you started when thinking about opening a Roth IRA. It is recommended that you meet with a financial advisor to further explore the intricacies of this account along with any other options you may have for saving for your future.
This item was created by the source, which is solely responsible for its content.
Managing your money wisely means being knowledgeable about your options, and making informed choices. Here at Centennial Wealth Advisory, we educate our clients so that they can take charge of their financial lives. We teach them the basics of wealth management and how to use their money to work toward a lifetime of financial freedom.
Check out Michael’s monthly retirement seminar! Michael will share his valuable knowledge at No Charge. Plus he’ll provide you with a complimentary lunch for coming!e
