What is a roth ira?
A Roth IRA is a personal retirement fund started in 1997 to help encourage people to plan for their own retirement instead of relying on the social security system.
There are many common traits between the regular IRA and the Roth IRA, and it is important to know the differences between them when deciding which to use.
One of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.
Another main difference to consider is that the penalty free withdrawal allowances in the traditional IRA are very few and far between. And they are only allowed under very specific circumstances.
The Roth IRA is much more loose with the withdrawal allowances. After five years you are allowed to withdraw the funds contributed.
For this very reason many have chosen to use the Roth IRA as their personal emergency fund. After five years you can use it for any unexpected emergencies that come up while simultaneously planning for your retirement.
It is important to pay attention to your personal circumstances befpre diciding how to plan for your retirement.
There are many common traits between the regular IRA and the Roth IRA, and it is important to know the differences between them when deciding which to use.
One of the main differences that comes to mind is that the traditional IRA is tax deductible. You are allowed to deduct the amount contributed to the fund for that year from your income when filing taxes. But the Roth IRA is not allowed as a tax deduction.
Another main difference to consider is that the penalty free withdrawal allowances in the traditional IRA are very few and far between. And they are only allowed under very specific circumstances.
The Roth IRA is much more loose with the withdrawal allowances. After five years you are allowed to withdraw the funds contributed.
For this very reason many have chosen to use the Roth IRA as their personal emergency fund. After five years you can use it for any unexpected emergencies that come up while simultaneously planning for your retirement.
It is important to pay attention to your personal circumstances befpre diciding how to plan for your retirement.
posted by Credit Counseling at
6:22 AM
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