Why a Roth IRA Is a No-Brainer for Retirement Savers
Roth accounts offer big advantages over traditional IRAs and 401(k)s.
Looking for a surefire wealth builder? Open a Roth IRA. You fund this retirement account with after-tax dollars, so the pain is up front. The payoff? All withdrawals are tax-free if you’re at least 59½ and have held the account for at least five years. You can always withdraw your original contributions tax- and penalty-free.
With traditional IRAs and 401(k)s, you have to take required minimum distributions every year. Not so with a Roth -- you can withdraw money strategically. Or, you can just let it grow and leave it to your heirs. And because withdrawals from a Roth aren’t reported to the IRS as income, they won’t increase the taxes on your Social Security benefits. Roth withdrawals also won’t trigger the high-income surcharge on Medicare Part B or Part D.
You can contribute up to $5,500 to a Roth IRA in 2017 – or $6,500 if you’re 50 or older – as long as you meet income limits. Allowed contribution starts to shrink if modified adjusted gross income is more than $186,000 for married couples filing jointly, or $118,000 for singles. You can’t contribute at all once modified adjusted gross income reaches $196,000 for joint filers, or $133,000 for singles.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Earn too much to qualify for a Roth IRA? Your employer may offer a Roth 401(k), which has no income limits and carries the same higher contribution caps as a regular 401(k). For 2017, the 401(k) contribution limit is $18,000, or $24,000 if you’re 50 or older.
-
Stocks Chop as the Unemployment Rate Jumps: Stock Market TodayNovember job growth was stronger than expected, but sharp losses in October and a rising unemployment rate are worrying market participants.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Should You Rent in Retirement?Making Your Money Last Renting isn't right for all retirees, but it does offer flexibility, and it frees up cash.
-
How to Achieve Your 2022 New Year's ResolutionsBrandon Copeland You've already made your New Year's resolutions. Atlanta Falcons linebacker and Kiplinger contributing editor Brandon Copeland explains how you can stick with them and accomplish them.
-
Santa's End-of-the-Year Finance TipsFeature Atlanta Falcons linebacker and Kiplinger contributing editor Brandon Copeland shares a few ways you can improve your finances before 2022 gets here.
-
Where to Retire in FloridaFeature Some cities in the Sunshine State are better suited for retirees than others.
-
3 Better Investments Than Powerball
Feature Buying Powerball and Mega Millions tickets is no substitute for sound financial planning.
-
Best Bank Accounts for Retirement
Feature These checking accounts offer attractive perks to retirees.
-
10 Timeless Financial Tips From Knight Kiplinger
Feature Sage advice about saving, spending and investing never goes out of style.
-
4 Overlooked Tax Breaks for Retirees
Feature Learn how to keep your tax bill low in retirement.
