Assume, you are 30 years old and you contribute $4000 per year to an IRA or company retirement program. If you continue to do so until you are 65, you will accccumulate over a $1 million if you earned 10% per year.
Assume you take 5% ($50,000) out each year to live, but you pass away at the age of 80. Your Roth IRA is still earning 10% Your IRA would be worth over $2 million. Your daughter inherited your IRA. She is 50 years old.
Your daughter has the option of leaving the IRA money in your name. She would start taking money out each year based on her life expectancy and pay taxes on that, but the rest could continue to grow tax-deferred. If your daughter's life expectancy is 30 years when you passed away, she could continue your IRA and would only have to take out 1/30th each year.
This means the $2 million can continue to grow tax-deferred for another 30 years! Letís assume it continues to earn 10% and that she takes out 5% ($100,000) each year. Thirty years down the road, the IRA the daughter inherited IRA from you will have grown to over 9 MILLION DOLLARS!
How High Earners Can Grab A Roth IRA
Paul Heck owns EveryHome, A successful real estate brokerage in suburban Philadelphia. The 53-year-old never considered making a Roth IRA part of his retirement plan. While Heck understands the substantial tax advantages of a Roth, he makes too much money to qualify. Recently, however, he got a tip from his financial planner about an upcoming change in the tax law that will allow Heck - and many other business owners - to seize a back-door opportunity to open a Roth.
Get a Roth IRA or IRA as what everyone is saying and if you want to have more control as to where you want to invest your money then get a Self Directed IRA. Seek out a financial advisor if you need any help.
Retirement For The 20-something Saver
Question: My wife and I are 27 years old and have contributed to a Roth IRA the past two years. Our money is in a 2040 target-date retirement fund that has about 90% of its assets invested in stocks and the rest in bonds and money-market funds. Should we continue to contribute the maximum to our Roth IRA if this is our only retirement vehicle? And is a portfolio mix of 90% stocks and 10% bonds and cash right for this volatile market? ?Joe, Lancaster, Ohio
Roth IRA 5 Year Rule
(http://www.money-zine.com/Category/Retirement/)There are two related, but slightly different 5-year rules that apply to Roth IRA withdrawals. The first has to do with earnings on contributions you've made to your account, while the second rule has to do with Roth IRA conversions.
Unhappy With Your Roth? Just Say Never Mind
Ever made a financial decision you wish you hadn't, like buying a mutual fund that turned out to be a dog? Wouldn't it be neat if you could simply act as if it had never happened? Well, you have that choice when you convert a 401(k) or traditional IRA to a Roth IRA. That's right: Change your mind and you may be able to get a do-over.
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