Disclaimer: I am not a financial advisor, please consult your financial advisor or do your own research
before applying any of my monetary strategies to your own situation.
When most people hear about a Roth IRA, they immediately think retirement. You’re not wrong, but a Roth IRA has so much more to offer! A few weeks ago, we began exploring our options beyond the basics, HERE, so let’s keep going:
Roth IRA Basics
- The IRS website has a nice, little qualifications chart HERE.
- The contribution limits are $6,000 for 2020 & 2021, and $7,000 if you are over 50. **You have until April 15, 2021 to contribute to the 2020 tax year.**
- Roth IRA contributions are made with after tax income. Roth contributions are NOT tax deductible, but distributions including all the growth are tax-free.
- No Required Minimum Distributions (RMD) when you reach age 72.
Roth IRA, Beyond Retirement
Sure, you can take distributions from your Roth, if you need to supplement your 401K from work. However, a Roth can be inherited. Once your child/beneficiary inherits your Roth IRA, they have 10 years to empty the account. This means they can do a few things:
- Maintain the generational wealth by leaving the money to grow for 10 years.
- Lump-sum distribution to enhance their quality of life. A tax-free event.
Investing Is A Big Picture, Long Term Approach
Remember investing is rarely a Get-Rich-Quick scheme. A disciplined approach over the course of your earning years will allow you and your beneficiaries financial freedom.