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Top 5 Benefits of a ROTH IRA | The Ultimate Investment Account - YouTube
Channel: The Money Mike Show
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Do you want to know the top 5 benefits to
a ROTH IRA stay tuned for this episode of
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The Money Mike Show!
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A ROTH IRA is one of the most powerful investment
vehicles you can use to build wealth.
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A ROTH IRA is a type of retirement account
but it differs from a traditional IRA and 401k
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in the way that it is taxed.
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With a ROTH IRA you are funding it with after
tax dollars, this is money from your pay
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check that you have already paid federal and
state taxes on.
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This enables you to get tax free income in
retirement.
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For example, let’s say you fully funded
your ROTH IRA for the next 40 years and contributed
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$220,000.
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Now let’s say that $220,000 grew to $800,000.
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In a ROTH IRA you could withdraw the entire
$800,000 tax free and not owe any taxes on
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it.
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In the contrary with a 401k if you contributed
$220,000 and it grew to the same $800,000
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when you go to retire you would have to pay
15% taxes on it if not higher in the next
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40 years.
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Owing about $120,000 to the government.
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Now do you see why a ROTH IRA is such a powerful
investment vehicle?
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A ROTH IRA is definitely one of the 1st type
of investment accounts you should open up.
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Not to mention, unlike a 401k where there
is a tax penalty for early withdrawals, in
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a ROTH IRA you can withdraw any contribution
you make to it at any time for any reason
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without a tax penalty, you just can’t touch
the gains.
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This makes a ROTH IRA a perfect account for
an emergency fund.
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Now because the ROTH IRA is such a powerful
investment vehicle the government has enacted
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yearly contribution limits to it.
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If you’re under 50 years old you can contribute
up to $5,500 per year if you’re over 50
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years old you can contribute up to $6,500
per year.
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Your goal should be to fully fund your ROTH
every single year.
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There are also tax advantages to funding your
ROTH IRA.
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Any amount you contribute to your ROTH IRA
throughout the year can be written off on
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your taxes!
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The federal government likes to reward people
who fund their own retirement.
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Because there is no taxes paid out on distributions
of a ROTH IRA.
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You can leave your ROTH balance to your kids
by making them a beneficiary on your account
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or through a will or trust!
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This makes a ROTH IRA a perfect tool for legacy
building and wealth creation.
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Lastly, because the ROTH IRA is a type of
retirement account you do have some protection
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in bankruptcy proceedings.
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In the future if you were to file bankruptcy
your creditors could come after everything
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you own but they could not touch the money
in your ROTH IRA because it is a type of sacred
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account.
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There are a host of other benefits of having
a ROTH IRA such as no minimum balance, and
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the fact that it acts as a money market account,
which means it pays you a higher interest
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rate than your typical savings account.
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In summary, there are many benefits to having
a ROTH IRA:
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A ROTH IRA is funded with after tax dollars
allowing you to get tax free income in retirement.
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ROTH contributions can be written off on your
taxes allowing you to lower your taxable income.
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ROTH contributions can be withdrawn at any
time for any reason, allowing it to act as
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a emergency fund or savings account.
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There are tax advantages to funding a ROTH
IRA that will allow you to lower your taxable
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expenses.
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ROTH IRA balances can be passed down to your
children, making it a powerful tool for legacy
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wealth building.
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And, there is some protection in bankruptcy
proceedings making your ROTH a sacred account
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and untouchable to your creditors.
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What are your thoughts about a ROTH IRA?
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Do you have one?
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Are you thinking about opening one up?
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Tell me in the comments below!
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If you found this video helpful make sure
to LIKE this video, SHARE it with a friend,
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I’m Money Mike “Helping You Reach a Financially
Free Future”
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