Pros & Cons of Roth IRAs

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Pros & Cons of Roth IRAs

A Roth IRA is an individual retirement account, named after Senator William Roth from Delaware, that allows after-tax money to be invested tax-free. Although a popular choice for retirement planning, Roth IRAs have several pros and cons to consider.

  1. Pro #1

    • Roth IRAs can be used to invest in a variety of assets, including Certificates of Deposit (CD), real estate and mutual funds.

    Pro #2

    • Roth IRAs do not have mandatory age requirements for withdrawal.

    Pro #3

    • Roth IRA funds can be used toward the purchase of a home.

    Con #1

    • Roth IRA contributions are not tax-deductible.

    Con #2

    • Roth IRA contributions are disallowed if your income exceeds the federal maximum income restrictions.

    Con #3

    • Contributions to a Roth IRA are made with after-tax funds.

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