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ROTH IRAs
A Roth IRA is worth more than a conventional IRA because withdrawals
from it are forever tax-free
A Roth IRA is worth more than a conventional IRA because withdrawals
from it are forever tax-free
What is a Roth IRA? Like other retirement savings plans, the Roth IRA allows you to invest money that
you’ll use when you retire. Your money accumulates tax-free and remains that way until you use it. The
Roth IRA was established as a part of the Taxpayer Relief Act of 1997 and has been available to
investors since 1998.
Tax advantages You get tax benefits with a Roth IRA when you make withdrawals, and under certain
conditions, the withdrawals you make aren’t taxed at all. (See conditions described under Distributions,
below.) So you’re basically converting the money you make into tax-free income.
However, because all contributions to a Roth IRA are made with after-tax dollars, you don’t receive any
tax benefit for putting money in. So, unlike a traditional IRA, you can’t deduct contributions from gross
income on your federal tax return. It’s up to you to decide if the potential for tax-free income in the future
or a current tax deduction is more important.
you’ll use when you retire. Your money accumulates tax-free and remains that way until you use it. The
Roth IRA was established as a part of the Taxpayer Relief Act of 1997 and has been available to
investors since 1998.
Tax advantages You get tax benefits with a Roth IRA when you make withdrawals, and under certain
conditions, the withdrawals you make aren’t taxed at all. (See conditions described under Distributions,
below.) So you’re basically converting the money you make into tax-free income.
However, because all contributions to a Roth IRA are made with after-tax dollars, you don’t receive any
tax benefit for putting money in. So, unlike a traditional IRA, you can’t deduct contributions from gross
income on your federal tax return. It’s up to you to decide if the potential for tax-free income in the future
or a current tax deduction is more important.
Distributions
When you withdraw money from your
Roth IRA, it’s called getting a distribution.
What you put in, referred to as the
principle, can be withdrawn income-tax
free at any time. If you’re older than 59½
and you started your Roth IRA at least
five years ago, then any money gained
on top of the principal (your earnings)
can be withdrawn tax-free. Otherwise,
withdrawals can be taxable and possibly
subject to a 10 percent early-withdrawal
penalty.
Another advantage to the Roth IRA is
that the government’s rules for minimum
distribution do not apply. So if at
retirement you’re living off other
resources and don't need the income
from your Roth IRA, you aren’t forced to
withdraw money at age 70½ as you
would with a traditional IRA. Earnings can
simply remain in your account and
continue to grow income-tax free.
However, if you die, anyone you’ve
chosen as your beneficiary will be
required to take distributions, and the
money left in your account could be
subject to estate taxes.
In some special cases, like if you want to
use the money to buy your first house,
withdrawals can be made prior to age
59½ without penalty. But in other cases,
like if you’re buying your second house,
withdrawals can be taxable. In other
words, you can always access your
money, but it’s best to keep it in your
account. If at all possible, you need to
consult with your financial planner before
you make any decisions about
withdrawing money from your account
When you withdraw money from your
Roth IRA, it’s called getting a distribution.
What you put in, referred to as the
principle, can be withdrawn income-tax
free at any time. If you’re older than 59½
and you started your Roth IRA at least
five years ago, then any money gained
on top of the principal (your earnings)
can be withdrawn tax-free. Otherwise,
withdrawals can be taxable and possibly
subject to a 10 percent early-withdrawal
penalty.
Another advantage to the Roth IRA is
that the government’s rules for minimum
distribution do not apply. So if at
retirement you’re living off other
resources and don't need the income
from your Roth IRA, you aren’t forced to
withdraw money at age 70½ as you
would with a traditional IRA. Earnings can
simply remain in your account and
continue to grow income-tax free.
However, if you die, anyone you’ve
chosen as your beneficiary will be
required to take distributions, and the
money left in your account could be
subject to estate taxes.
In some special cases, like if you want to
use the money to buy your first house,
withdrawals can be made prior to age
59½ without penalty. But in other cases,
like if you’re buying your second house,
withdrawals can be taxable. In other
words, you can always access your
money, but it’s best to keep it in your
account. If at all possible, you need to
consult with your financial planner before
you make any decisions about
withdrawing money from your account
| Snowmobiling in Yellowstone |
Yellowstone Winter Fun equals "Yellowstone
Snowmobiling". Whether in Yellowstone
National Park or in Yellowstone snowmobile
country, snowmobiles beckons to experience
the vacation of a lifetime. Yellowstone
companies offer daily snowmobile rentals,
guided Yellowstone snowmobile tours and
even full Yellowstone snowmobiling vacation
packages.
Winter temperatures are severe in
Yellowstone, but you can be comfortable and
confident if you are properly dressed.
Prepare for changing conditions by wearing
clothes in several adjustable layers. It is as
important to prevent overheating as it is to
prevent chilling.
Be sure your clothing includes a windproof,
hooded outer layer with wool or other
insulated garments underneath. Wool or
synthetic trousers and long underwear will
help to keep your legs warm and dry in deep
snow. Wind or rain-pants are lightweight and
provide extra warmth on windy days. Avoid
cotton jeans and sweatshirts. Thick wool
socks and gaiters over boots help to keep
your feet warm and dry. Wear gloves or wool
mittens with shells that breathe to allow
moisture to escape from sweaty hands.
Since you lose more heat through your head
than any other part of your body, wear a face
mask-style stocking cap or parka hood when
you need maximum protection. Dark
sunglasses are a must for sunny days. High
altitude sunlight reflected from snow is much
more intense than at lower elevations;
snow-blindness may occur if sunglasses are
not worn. Apply sunscreen lotion to exposed
skin to avoid sunburn.
Snowmobiling". Whether in Yellowstone
National Park or in Yellowstone snowmobile
country, snowmobiles beckons to experience
the vacation of a lifetime. Yellowstone
companies offer daily snowmobile rentals,
guided Yellowstone snowmobile tours and
even full Yellowstone snowmobiling vacation
packages.
Winter temperatures are severe in
Yellowstone, but you can be comfortable and
confident if you are properly dressed.
Prepare for changing conditions by wearing
clothes in several adjustable layers. It is as
important to prevent overheating as it is to
prevent chilling.
Be sure your clothing includes a windproof,
hooded outer layer with wool or other
insulated garments underneath. Wool or
synthetic trousers and long underwear will
help to keep your legs warm and dry in deep
snow. Wind or rain-pants are lightweight and
provide extra warmth on windy days. Avoid
cotton jeans and sweatshirts. Thick wool
socks and gaiters over boots help to keep
your feet warm and dry. Wear gloves or wool
mittens with shells that breathe to allow
moisture to escape from sweaty hands.
Since you lose more heat through your head
than any other part of your body, wear a face
mask-style stocking cap or parka hood when
you need maximum protection. Dark
sunglasses are a must for sunny days. High
altitude sunlight reflected from snow is much
more intense than at lower elevations;
snow-blindness may occur if sunglasses are
not worn. Apply sunscreen lotion to exposed
skin to avoid sunburn.
1st Quarter 2008
