Rhode Island Roth IRA

A Rhode Island Roth IRA can supplement your retirement income with tax free investments, allowing you to apply 100 percent of the funds you've saved to your personal expenses. In order to achieve the retirement you truly want, it's important to draw from a number of different investment strategies. The tax advantages of a Roth IRA plan make this option attractive to RI investors who are preparing for retirement, considering the purchase of a first home or looking for ways to provide a substantial legacy to their heirs.

Known as the Ocean State, Rhode Island has a long history in fishing, shipping and boatbuilding. The city is a popular destination for visitors who want to enjoy the abundant coastline of RI and its historic and cultural offerings. In contemporary Rhode Island, health care is the predominant industry, and education and manufacturing also play important roles in the state's economy. As you build a life for yourself and your loved ones in RI, consider the benefits of adding a Rhode Island Roth IRA to your personal financial plan.

Eligible Distributions

A Rhode Island Roth IRA offers a number of tax benefits that make this retirement strategy stand out from the rest. The contributions that you make to a Roth IRA come from post-tax income, which gives you greater flexibility in the use of your funds. Rather than paying taxes on your eligible distributions, you can withdraw funds without tax penalties if you meet the requirements of the Internal Revenue Service. In addition, the money that you invest in stocks, bonds, cash equivalents or mutual funds earns at a tax free rate.

After the first taxable year that you make a contribution to a Rhode Island Roth IRA, you must allow the account to mature for five years before collecting distributions, in most cases. [1] At the age of 59 1/2, you become eligible to collect distributions without paying income taxes on your contributions or their earnings. Before age 59 1/2, you may withdraw money from your direct contributions without penalties at any time, but you will be required to pay taxes on your earnings.

In order to qualify for an early Roth IRA distribution of direct contributions and earnings, you must have held the account for 5 years. You must have an eligible reason for withdrawing money from the account, such as a physical disability. If you intend to build or buy a first home in Rhode Island, you may be eligible for an early distribution up to the maximum amount that the IRS allows for this purpose.

You may also qualify for distributions without the 10 percent penalty if you have unreimbursed medical expenses that total a significant percentage of your income, or if you have lost your job and you need the money to cover medical insurance. If you are the beneficiary of a deceased Roth IRA trustee, you may be eligible to withdraw money without penalties. A distribution that doesn't meet one of the exceptions for early withdrawal may be subject to taxation and penalties. [1]

Unlike a traditional IRA, a Roth can continue to accrue value throughout your lifetime. With a traditional individual retirement account, you must begin making withdrawals by the age of 70 1/2. With a Rhode Island Roth IRA, by comparison, Rhode Island investors may keep the funds in holding and allow their investments to continue to grow indefinitely. In this sense, a Rhode Island Roth IRA can also be a valuable estate planning tool, adding to the value your legacy in Rhode Island.

Maximizing Your Roth IRA Contributions

Rhode Island investors can benefit from the growth potential of a Rhode Island Roth IRA at any age. A Rhode Island Roth IRA can include a number of diverse investment vehicles, including cash equivalents, stocks, bonds and mutual funds. When you work with a knowledgeable retirement planner, investment advisor or portfolio manager, you can create a set of investment options that will provide maximum growth in the years to come without jeopardizing the stability of the fund.

If you want to accelerate your investment plan to ensure a comfortable life when you retire, you have the option to increase your annual contributions at the age of 50. [1] Investors under 50 are limited to contributions of $5,000 per year, but investors ages 50 and over may contribute $6,000 per year. This increase gives you the opportunity to augment your earnings as you get ready to conclude your career.

Your financial goals, your risk tolerance level and the nature of your income taxes may help you decide whether a Rhode Island Roth IRA is the right choice for you. Talk with an experienced financial professional to learn more about this innovative investment tool. The more you know about your options, the better equipped you'll be to plan a secure future.

http://www.irs.gov/publications/p590/ch01.html#en_US_2011_publink1000230701 01/11/2012

Roth IRA

Roth IRA

Did you Know?

The Roth IRA is a retirement account that is funded with post-tax income. You pay taxes on your income this year as you would during any year and invest the funds in the Roth. Since taxes have been paid before investing you never pay income taxes on those funds in the future.


Advisors In rhode island

John Finn
John Finn
850 Aquidneck Ave
Ste A4
Middletown, RI 02842

Nick Loring, CFP®, CIMA®, MBA, CRPC®, CRPS®
Nick Loring, CFP®, CIMA®, MBA, CRPC®, CRPS®
600 Putnam Pike
Suite 4
Greenville, RI 02828

Jason Siperstein, CFP®, CFA
Jason Siperstein, CFP®, CFA
1300 Division Rd
Suite 301
West Warwick, RI 02893