Posts Tagged ‘Tax-Free’


How to Use a Roth IRA to Purchase Your First House

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It can be difficult for younger people to save up to purchase their first house.  Paying rent, making a car payment and perhaps paying off a student loan can drain your cash flow. While a Roth IRA is designed to be used for retirement one possible use would be to use a Roth IRA for the down payment on your first … Continue reading »


3 Proven Reasons Young Investors Should Fund a Roth IRA and Roth 401(k) to Save

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Time

As the Rolling Stones said, “Time is on my side.” And so it is with younger investors, time is clearly on their side.  The benefit to a Roth IRA or Roth 401(k) plan is that if all of the requirements are met, the distributions are tax-free. To fund a Roth IRA you will need to have earned income.  This is the … Continue reading »


3 Reasons I Encouraged My Son to Open a Roth IRA

I recently suggested to my son that he open a Roth IRA.  Here are the 3 reasons why.

 

 1) He’s Young

The Roth IRA offers a huge advantage over a regular IRA. This is particularly so for younger people.  With the IRA you are (generally) allowed a tax deduction for this.  The IRA grows tax deferred. You can begin to take distributions after age 59 1/2 without penalty.  You must begin taking distributions after … Continue reading »


How to Explain a Roth IRA to Your 25 Year Old

 

Roth IRA Eligibility

To be eligible for a Roth IRA you need to have earned income.  This is typically from wages earned as an employee.  Earnings from self-employment also qualify. The annual contribution is the lesser of your earned income or $5,000. The contribution can be made at any time during the year and up to April 15th following the year.


The Last (Really BIG) Tax-Free Gift

Under current federal estate tax law there is an exclusion up to $5.12 million in 2012. Taxable estates above this amount are taxed at 35%. This exclusion is scheduled to decrease to $1 million beginning in 2013. The tax rate will also increase to 55%. This exclusion can be used either at death or during life.  In other words, the federal estate tax and the federal gift tax are unified.

There is speculation that Congress won’t allow this exclusion to … Continue reading »


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