When you invest in a Roth the contributions aren’t deductible. However, when you retire and you begin to withdraw the money during your retirement the withdrawals are tax-free. It’s a nice non-taxable retirement income stream to complement other income sources that will be exposed to higher future tax rates.
Currently, another Roth benefit is that the withdrawals aren’t counted in any of the calculations that penalize taxpayers at certain adjusted gross income levels, such as the 3.8% Medicare surtax, or the tax on Social Security benefits or the income-based Medicare premiums.
Related Information in Prosperity News
- How the New Wealth Taxes Will Hit You
- How to Get Cash Out of Your 401(k) or IRA Without Paying a Penalty
- Pay less tax when planning for retirement
- Saving: Building a Nest Egg on a Part-Time Salary
- Big Drop in Financial Security Due to Income, Medical Costs and Debt
- Doing a Roth Conversion may Impact Financial Aid Next Year
- Managing a High-Income Roth Conversion
- A Roth Conversion and Your Estate Planning Strategy
