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Benefits of Contributing to a Roth IRA

Torrey Thompson

Torrey Thompson serves as the general manager of Amerilife and Health Services in Atlanta. In this capacity, Torrey Thompson conducts educational seminars on Medicare coverage and retirement strategies. Investing in retirement accounts, such as a Roth Individual Retirement Account (IRA), can provide a number of benefits, as outlined below.

1. Offers tax-free income at retirement. Contributions to a Roth IRA will provide you with tax-free income when you retire. A Roth IRA enables you to contribute after-tax dollars and to withdraw your money tax-free when you retire.
3. No required minimum distributions. Traditional IRAs have required minimum distributions (RDM), which means that you must begin withdrawing funds after age 70 1/2. A Roth IRA does not have required minimum distributions, which gives you more control over your funds and means that your money can continue to grow tax-free for as long as you wish.
4. Penalty-free withdrawals of your contributions. While withdrawing money from a traditional IRA before the age of 59 1/2 will result in a 10 percent penalty and an IRS bill for income tax on the amount withdrawn, a Roth IRA allows you to access your contributions penalty-free at any time in the event of an emergency. However, this applies only to your direct contributions and not your investment earnings.

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