4 Benefits of a ROTH IRA

A Roth IRA is a type of individual retirement account that’s funded with after-tax money. Roths, as they are commonly referred to offer tax-free growth and tax-free withdrawals in retirement. In addition to offering versatility and tax efficiency, they also include the following benefits.

First, you get tax-free growth. Probably the biggest benefit of Roth IRA’s is that they let you

grow your retirement funds tax-free. As your account grows, you won't pay extra taxes on what it earns, nor will you be taxed when you withdraw the funds later in retirement. As David Rosenstrock, director and founder of Wharton Wealth Planning, explains: "The reason these plans are so important is that they combine the power of compounding with the benefit of tax-free growth."

Second, you get tax flexibility in retirement. You've already paid the taxes on the contributions to a Roth IRA, so, as long as you follow the rules, you get to take out your money tax-free. Mixing how you take withdrawals between your traditional IRAs or other qualified accounts, and Roth IRAs may enable you to better manage your overall income tax liability in retirement. You could, for example, take withdrawals from a traditional IRA until your taxable income reaches the top of a tax bracket, and then take additional money you need from a Roth IRA.

Third, you create a hedge against future tax hikes. Will tax rates rise in the future? There's no

way to know for certain, but the top federal income tax rate remains far below its historical highs, and if you think it might go up again, a Roth IRA may make sense.

Finally, your beneficiaries won’t be taxed. Although the people who inherit your Roth IRA will

have to take required minimum distributions, they won’t have to pay any federal income tax on their withdrawals as long as the account has been open for at least 5 years**.

At R&R Financial Advisors, we enjoy helping our clients add this important strategy to their

portfolios. If you would like to learn more about the use of ROTH IRA’s in your portfolio, please feel free to reach out.

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*https://financialsuccessmd.com/how-to-successfully-plan-for-retirement-income-and-taxes/

** The 5-year holding period for Roth IRA’s starts on the earlier of: (1) the date you first contributed directly to the Roth IRA, (2) the date you rolled over a Roth401(k) or Roth 403(b) to the Roth IRA, or (3) the date you converted a traditional IRA to the Roth IRA. If you are under age 59½ and you have one Roth IRA that holds proceeds from multiple conversions, you’re required to keep track of the 5-year holding period for each conversion separately.

Investment advisory services are offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor and an affiliate of Brookstone Capital Management, LLC. BWA and R&R Financial Advisors, LLC are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents. Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional.