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Advantages of Using a ROTH IRA

1. No taxes are due on withdrawals from the account if the proceeds are generated after the taxpayer reaches age 59 ½.

2. The taxpayer does not have to take mandatory distributions from the account at the age of 70 ½.

3. Contributions can be made after the tax year ends. The deadline to contribute is April 15th of the next year.

4. A stay-at-home spouse can make contributions even if he or she has no earned income.

5. The Retirement Saver's Credit encourages retirement savings by allowing a credit based upon a percentage of amounts contributed to a Roth (or regular) IRA. This credit can be for an amount as high as $1,000.

6. Up to $10,000 can be withdrawn for a first-time homebuyer without paying the early withdrawal penalty

7. Up to $10,000 can be used for certain education and other expenses without paying the early withdrawal penalty

Disadvantages of Using a ROTH IRA

1. Contributions cannot be used to offset taxable income (as with a traditional IRA).

2. There is a 10% early distribution penalty.

3. Relatively low maximum contribution amount.

(This information is designed to be of general interest.  The specific techniques and information discussed may not apply to you.  Before acting on any matter contained herein, consult with your professional advisor.)


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