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The Worst Roth IRA MISTAKES Made EVERY Day | Losing MILLIONS In Retirement - YouTube
Channel: Drs. Gan and Mo
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What's going on YouTube, it's Gan and Mo
and welcome back to our channel. In
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today's video, we're gonna be diving into
the most common Roth IRA mistakes that
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could be costing you hundreds of
thousands of dollars so let's dive right
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into it so a Roth IRA is a very special
type of retirement account that's very
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dear to gains hearts like a child of
mine so you're able to contribute
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post-tax dollars into this account the
money gets to grow on compound and you
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pull the money out at the age of 59 and
a half without ever paying taxes on it
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again and the max for the Year 2020 the
contributions is six thousand dollars as
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great of a retirement account the Roth
IRA might be making these mistakes with
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your Roth IRA could cost you hundreds of
thousands of dollars to make sure you
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avoid them pulling out your money too
early this is a huge pitfall with many
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investments and the Roth IRA stands no
different but many investors in the Roth
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IRA want to do this but remember this is
not an emergency fund if you pull out
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your money before the age of fifty nine
and a half you are subject to a 10%
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penalty plus income tax on any accrued
earnings but there's good news to all of
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this the amount you contributed
originally into your Roth IRA can be
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withdrawn tax-free and penalty free but
any amount above that is considered
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accrued earnings and is subject to
income tax now a few exceptions to the
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penalty or pulling that money out for
the down payment of your primary house
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you can use $10,000 without paying any
penalty on that money also upon your
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death your beneficiaries are gonna be
able to access the money without paying
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any penalties on it now one thing with
the Roth IRA is that you have to keep
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the money in there for a minimum of five
years now there are no minimum age
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distributions when it comes to the Roth
IRA the second fault is over
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contributing to your Roth IRA in the tax
year of 2020 you can have a maximum
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contribution of $6,000 to your Roth IRA
if you're under the age of 50 but if
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you're greater than 50 you can
contribute an additional thousand
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dollars for a total contribution of
$7,000 but there are income thresholds
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to be aware of if you make less than a
hundred and twenty four thousand dollars
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if you're single or $196,000
if you're filing jointly you can
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contribute to a Roth IRA and if you make
more than a hundred and thirty nine
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thousand dollars single or two hundred
and six thousand dollars jointly you
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cannot contribute to a Roth IRA so if
you so happen to over contribute to your
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Roth IRA you're gonna be slapped with a
six percent penalty on the excess funds
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that you put in now the third most
common mistake is not spending the extra
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time so you can set up your Roth IRA
properly and that includes listing your
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beneficiaries on your Roth IRA that will
help you avoid the two to five percent
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you're going to be paying in fees
between lawyers and the court that's
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because your Roth IRA ended up passing
through your estate and it's going to
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end up in probate now the fourth mistake
is not taking advantage of a spousal IRA
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for a nonworking spouse the general
assumption is that you cannot contribute
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to a nonworking spousal IRA because he
or she does not have earned income and
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therefore do not have post tax dollars
for the Roth IRA false not true as
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possible IRA allows a nonworking spouse
to take advantage of contributions to a
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Roth IRA that is as long as the working
spouse is able to contribute to both I
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arrays for a maximum of six thousand
dollars apiece and that is a total of
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twelve thousand dollars for the year
combined a fifth mistake is not
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contributing to your Roth IRA because
contributions are not tax deductible
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let's clear the air here everyone hears
the word tax deductable and shoots for
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the investments that provide tax
deductions but not contributing to a
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Roth IRA because they're not tax
deductable is stupid a no-brainer
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because the long run benefits of the
Roth IRA are beyond anything of tax
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deductions and the sixth most common
mistake is not contributing to your Roth
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IRA because your employer does not
provide that plan well this is actually
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a question on the IRS website you are
able to take advantage of both your Roth
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IRA as well as your employer-sponsored
plan and that will allow you to take
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advantage of some free and some post tax
sheltering which will allow you to have
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some pre-tax growth on your money and
some post tax growth on your money and
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that will allow for a great
diversification of
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and retirement a seventh mistake is
making a trust the IRA owner this can
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cause immediate taxation of 10% if the
owner of the IRA is less than fifty nine
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and a half years of age so making any
one of these mistakes can cost you
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hundreds of thousands of dollars in the
long run so don't do them but do
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gingerly tap that like button and don't
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