January is the 20th Anniversary of the Roth IRA
This January marks the 20th anniversary of the Roth IRA. First made available to American investors in January of 1998, a Roth IRA is an individual retirement account that is funded with after-tax dollars and provides tax-free growth and income for retirement.
“The 20th anniversary of the Roth IRA serves as a good reminder to examine why this type of retirement account might be right for you,” said Jeff Kowal, President, Kowal Investment Group. “There are several benefits that come with a Roth IRA, including tax-free growth and distributions in retirement. Someone who may have saved a million dollars in their traditional IRA may only see half of that amount after they pay income taxes. The beauty of the Roth IRA is that it allows you to contribute after-tax dollars, which can help you avoid a tax time bomb in retirement.”
“I am a big proponent of Roth IRAs, as contributions today lead to tax-free money in retirement, when you need it most,” said Ed Slott, CPA, founder of Ed Slott and Company and a nationally-recognized IRA expert who was named “The Best Source for IRA Advice” by The Wall Street Journal. “Unfortunately, the rules surrounding these retirement accounts are as confusing as ever, so it is important to work with someone who specializes in them.”
Kowal is a member of Ed Slott’s Elite IRA Advisor Group, an exclusive membership group dedicated to the mastery of advanced retirement account and tax planning laws and strategies. Members of Ed Slott’s Elite IRA Advisor GroupSM attend semiannual live training events and have year-round access to Ed Slott and Company’s team of retirement experts for consultation on advanced planning topics.
To determine whether a Roth conversion is right for you, it may be beneficial to work with a financial professional who receives specialized training in the ‘second half’ of the retirement game, the distribution phase. “As a member of Ed Slott’s Elite IRA Advisor Group, I take pride in knowing that I am up to speed on the latest retirement strategies and able to provide my clients with the help they need to plan for a successful retirement,” said Kowal.
“Over the last 20 years, a lot has changed for Roth IRAs,” said Slott. “With ever-changing laws, including Congress’s recent decision to eliminate Roth recharacterizations, it is more important than ever for financial professionals to receive ongoing training. I commend Kowal for prioritizing his education and taking the necessary steps to understand the intricacies of retirement accounts and the tax laws that impact them.”
Material provided by Ed Slott and Company.
Raymond James is not affiliated with nor does it endorse the services or opinions of Ed Slott, Ed Slott and Company or Ed Slott’s Elite IRA Advisor Group. This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Earnings withdrawn prior to 59 1/2 would be subject to income taxes. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to complete a conversion. Additionally, each converted amount may be subject to its own five-year holding period. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.