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30212 Tomas, Suite 200
Rancho Santa Margarita CA 92688 |
Advantages of Using a ROTH IRA 1. No taxes are due on withdrawals from the account if the proceeds are generated after the taxpayer reaches age 59 1/2. 2. The taxpayer does not have to take mandatory distributions from the account at the age of 70 1/2. 3. Contributions can be made after the tax year ends. The deadline to contribue is April 15th of the following year. 4. A stay-at-home spouse can make contributions even if he or she has no earned income. 5. The Retirement Saver's Credit encourages retirement savings by allowing a credit based upon a percentage of amounts contributed to a Roth (or regular) IRA. This credit can be for an amount as high as $1,000. 6. Up to $10,000 can be withdrawn for a first-time homebuyer without paying the early penalty. 7. Up to $10,000 can be used for certain education and other expenses without paying the early withdrawal penalty. Disadvantages of Using a ROTH IRA 1. Contributions cannot be used to offset taxable income (as with a traditional IRA). 2. There is a 10% early distribution penalty. 3. The maximum amount the taxpayer can contribute in 2004 is $3,000 ($3,500 if the taxpayer is over 50). |
