Top 3 Reasons to Contribute to Roth IRA

22 Jul Top 3 Reasons to Contribute to Roth IRA

Roth IRA is a kind of Individual retirement account that gives you different benefits from traditional IRA.  It also has different guideline in terms of withdrawing money.  Regardless which investment you pick, start contributing as soon as you can to take advantage of compounding.  Here are the top 3 reasons you should contribute to an Roth IRA account:

1) When you withdraw money from your Roth IRA (after 59½) it is tax free if your account has been active for more than 5 years.  It means you get to keep all of the growth and appreciation on your investment over the lifespan of investment.

2) You have access to your investment contribution without taxes or penalties at any time since you already paid taxes on that.  It is highly recommended that you not doing that since it will break the compounding effect on the investment.

3) If you need to withdraw the earnings of your investment before 59½, you can do it under certain conditions (such as buying your first house, disability, etc).  Refer to IRA specific rules on that.