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Building Wealth and Avoiding Taxes with a Roth IRA

Building Wealth and Avoiding Taxes with a Roth IRA

March 18, 2024

As you are building your wealth and saving for retirement, a Roth IRA
could be a tax-advantaged solution for you to invest your money and boost
your retirement savings. Why?

Money that goes into a Roth IRA is after-tax dollars.

You can withdraw your contribution at any time, tax
free.

In order to  qualify for the tax-free designation, distributions have to meet
certain criteria:

The distributions must be taken at least five years after the
IRA was established and the account holder is at least 59 ½, and if taken
prior to 59 1/2 distributions may be subject to an additional 10% IRS tax
penalty. Depending on state law, Roth IRA distributions may be subject to
state taxes.


Another great thing about a Roth IRA is that any growth is tax-free – any
earnings on your contributions will be tax-free. The 2024 contribution limit
is $7,000 per year. But for those who are 50 or older, that limit gets
bumped up to $8,000. The additional $1,000 is known as a catch-up
contribution.


To help make the most of your Roth IRA and the compound interest that
comes with it, add your contributions as early in the year as you can. The
earlier you add funds into the account, the sooner the compound interest
takes effect and the more you can save.

There isn't an age restriction on when you can open
a Roth IRA. As long as you are earning taxable income, you can open an
account and begin contributing. This allows you to begin saving without
having to wait for an employee-sponsored retirement account.


Certain distributions from a Roth IRA are tax-free, but there may be some
scenarios where withdrawing money from your Roth IRA could result in a
tax penalty. Distributions that do not qualify for the tax-free status are
taxed based on the source of the Roth IRA assets and rules set by the
IRS.

For a comprehensive review of your personal situation, always consult with a tax advisor. Neither Cetera Advisors LLC nor any of its representatives may
give tax advice.


At IFG we are here to help you  learn more about using a Roth IRA to build your future
wealth.  Schedule an appointment today. .