Save for retirement with an account that offers excellent tax advantages and penalty-free early withdrawals in some situations. Whether you're just starting your career or nearing retirement, a Roth IRA near Manlius NY could be right for you.
What is a Roth IRA?
A Roth IRA is a type of Individual Retirement Account (IRA) that allows you to contribute after-tax dollars, foregoing an upfront tax deduction like a traditional IRA would offer. By contributing money you've already paid taxes on, your retirement savings can grow tax-free. This makes a Roth IRA a great option for individuals that expect to be in a higher tax bracket when they begin making withdrawals from their IRA.
After age 59½, you can begin withdrawing from a Roth IRA tax-free and penalty-free, although early withdrawals can be made penalty-free in certain situations. A Roth IRA near Manlius NY is a great option for individuals seeking a retirement account that provides flexibility and tax-free growth.
How Does a Roth IRA Work?
Planning for a secure retirement starts with consistent saving. With a Roth IRA, you can contribute a portion of your income each year with after-tax dollars. These contributions are then invested in a variety of assets, such as stocks, bonds, mutual funds, and more, giving your retirement savings the opportunity to grow over time. For added flexibility, you may be allowed to withdraw funds penalty-free for specific purposes, such as purchasing your first home or paying for qualified education expenses.
How Does a Roth IRA Differ from a Traditional IRA?
A key advantage of Roth IRAs is to prioritize tax-free growth on your investment gains, meaning your money compounds faster as you won't pay taxes on earnings.
Roth IRA
- Allows you to contribute money you've already paid taxes on, allowing your earnings to grow tax-free.
- No current-year tax benefits.
- Penalty-free and tax-free after account is over 5 years old and age is 59½ or older.
- No mandatory distribution age.
- Overall: Enjoy tax-free withdrawals in the future.
Traditional IRA
- Make pre- or after-tax contributions. By contributing pre-tax dollars, your earnings would be taxed upon withdrawal based on your income at that time.
- Gives you immediate tax benefits.
- Penalty-free after age 59½, but taxed as current income at the time of withdrawal.
- Mandatory distribution after age 73.
- Overall: Tax-free contributions today, but taxes will be deferred to the time of withdrawal.
Is a Roth IRA Right for You?
Benefits of a Roth IRA
Tax-Free Retirement Income: With qualified withdrawals being entirely tax-free, you keep more of your hard-earned money when you need it most.
No Required Minimum Distributions (RMDs): Roth IRAs don't have mandatory withdrawals like traditional IRAs do. After age 59½ (or if specific conditions are met), you decide when to tap into your savings, giving you greater control over your finances.
Tax Diversification Strategy: By owning a Roth IRA and a traditional IRA, you can create a tax-diversified retirement portfolio that allows you to strategically withdraw funds in retirement to minimize your tax burden.
Potentially Significant Long-Term Growth: Since contributions are made with after-tax dollars, your investments have the potential for substantial tax-free growth over time.
Contribute Throughout Your Career: Regardless of your age, you can contribute to a Roth IRA as long as you earn income that meets the eligibility requirements. This is ideal for individuals who plan to work past the traditional retirement age.
Access Your Contributions Anytime: If you're in need of money before age 59½, you may qualify for penalty-free withdrawals under specific conditions. For example, purchasing your first home may allow you to tap into your Roth IRA account. After age 59½ with an account 5 years or older, you can tap into your retirement savings anytime with a Roth IRA.
Who is eligible to contribute to a Roth IRA?
People that earn income or receive alimony can contribute to a Roth IRA, but income from sources like investments or inheritances does not qualify.
While contribution rules apply, anyone can open a Roth IRA at Geddes Federal Savings. By opening a Roth IRA near Manlius NY, you can take advantage of the tax-free growth, even if you can't contribute currently. To determine eligibility and understand the specifics, consult with a financial advisor or review the latest IRS guidelines.
Your Neighbors at Geddes Federal Can Answer Your Questions About a Roth IRA
Our local, friendly team members are ready to assist you at Geddes Federal's Manlius branch whenever you have questions about a Roth IRA. Whether you're looking to open an account or have questions about an existing account, help is with you every step of the way.
Manlius Branch
240 West Seneca Street (Route 173)
Manlius, NY 13104
Jumpstart Your Retirement Savings Today
Our knowledgeable experts at Geddes Federal are here to answer your questions and help you feel secure about your retirement savings.