It’s never too early to start thinking about retirement. If you’re ready to begin planning for this important stage of your life, you need the right retirement account to help you achieve your goals. Fortunately, a Roth IRA can help provide you with all the tools you need to get a head start on retirement and start taking better control of your finances.

Before you open your own Roth IRA, it’s crucial to understand what this account entails and how it can prove useful as you work towards retirement. Once you have a better understanding of how this account works and how it will help you, you’ll be fully equipped to use it to your benefit. Our comprehensive guide to Roth IRAs can answer all of your questions and help you get started.

What Is a Roth IRA?

A Roth IRA is a type of individual retirement account (IRA) named after William Roth, a former senator of Delaware. Under a specified set of conditions, Roth IRAs permit investors to make qualified withdrawals free of tax. While you must first pay taxes on the money that enters your account, any withdrawals you make from that point forward are made on a tax-free basis.

It’s also worth noting that Roth IRAs differ from traditional IRAs in several notable ways. For example, traditional IRAs tend to be funded with pre-tax dollars, while Roth IRA deposits are typically made with after-tax dollars. This means that contributions to Roth IRAs are not tax-deductible. On the other hand, contributions to traditional IRAs normally qualify for tax deductions.

Benefits of Opening a Roth IRA

You now know that the main benefit of a Roth IRA is growing your investment free of tax. However, there are many other key advantages of this account that you can explore when you open your own Roth IRA.

One of the most notable advantages of a Roth IRA is that it’s less restrictive than other retirement accounts. As long as you’re actively earning income, you can contribute to this account no matter your age. Additionally, while traditional IRAs come with required minimum distributions (RMDs), Roth IRAs do not have this requirement. This gives you the freedom to maintain your account for as long as you please.

Moreover, you can choose to fund your Roth IRA from a wide variety of sources, making it a highly flexible retirement account. Some possible funding sources for your IRA include regular contributions, rollover contributions, spousal IRA contributions, transfers and conversions.

Taking the Next Steps

Now that you know what to expect from opening your own Roth IRA, you can start preparing for the next steps. Whether you still have more questions about the process or are ready to open your own account, feel free to contact us with your questions or concerns. Taking this important step towards your retirement will help ensure that you’re prepared to more effectively manage your finances.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

A Roth IRA offers tax deferral on any earnings in the account.  Qualified withdrawals of earnings from the account are tax-free.  Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax.  Limitations and restrictions may apply.