Are you thinking about opening up a Roth IRA? The good news is that there are some generous tax breaks you can benefit from when you open up a Roth IRA.
Tax Breaks With Roth IRAs
While traditional IRAs offer you a tax break when you make your contributions, Roth IRAs offer you tax benefits when you take your distributions. That means you’ll pay less in taxes later in life. Contributions to a Roth IRA are always made on an after-tax basis, so that means you’re able to grow your money for free and you will not have to pay any taxes on it when you decide to take a distribution.
There are a few rules, though, about taking distributions from your Roth IRA. You can begin taking qualified distributions at age 59½ with no tax penalties. If you try to withdraw funds before this age, you’ll have to pay a penalty. Also, your funds must have been in your Roth IRA for at least five years before you take your first distribution, or you’ll be assessed a tax penalty. Fortunately, though, there is no minimum distribution requirement for a Roth IRA, so you can let your money grow as long as you like.
To learn more about Roth IRAs and your taxes, turn to the pros at Taxation Solutions, Inc. today!