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Mitchell's Money Minute: Who Qualifies for Roth IRA?
By Philip Mitchell
On tonight's episode of Mitchell's Money Minute, we continue our discussion on Roth IRA's. Tonight's question is, what are the main benefits of a Roth IRA and who qualifies?
"We find their are multiple benefits. First of which, it is critical in retirement to make sure that you have an income stream from different investments or different sources. We find it's beneficial if a portion of that income stream or a portion of what you're living on in retirement can be tax free," said Logan Stanley, Edward Jones Financial Advisor. "So, it's a tremendous opportunity, especially, to younger investors because they've got more time to let those dollars grow tax free. The other benefit we find is the fact that those assets can be passed down to other generations with those same benefits. So, it provides a potential tax free stream of income in retirement, but also it can be passed down to family tax free as well."
So, here's another look at those benefits. The money not only grows tax free in the account, but when you draw it out after age 59 and a half, that income stream will be tax free as well. Another key point is the younger you are, the longer you have to contribute to a Roth IRA, which could create more tax free retirement income than someone who starts later in life. The final point is the Roth IRA can be passed on to family while still retaining those tax free benefits.