NewsReak Financial

Interested in saving money on your next years taxes? Then you might want to consider how a Roth IRA works so that you can make the most of your money.

In simple terms, you could look at an IRA as way to add to your retirement. The types of investments that can be obtained through a Roth IRA include Bank CD’s, stocks, mutual funds, bonds and of course various cash options.

Where do you get a Roth IRA?  There are quite a few brokerages that offer the service of purchasing your plan in the form of trades. Tradeking is one that has a nominal fee of $4.95 per trade, but their IRA’s have no maintenance fee. Zecco is another brokerage that is great because it doesnt charge any fee as long as the investment is large enough.

So whats the difference between an IRA and a Roth IRA? If you want to not pay taxes on money put away in a traditional IRA, then you can do that now. The Only downside to that is that you will have to pay later when you pull that money for retirement. On the other hand, if you have a Roth IRA, you pay taxes now on your investment so that you do not have to pay for it later when you do draw it for retirement income.

So whats the downside if you pull the money out before retirement? You might be subject to additional taxing and may owe fees. This leads us to the next question. When can you draw the money penalty free of taxes? This can be done at the age of 59 in most cases. You can also take out half if the money has been held in a Roth IRA for at least 5 years.

The advantages of  a Roth IRA are obvious, and the great thing is that you can still choose how you invest whether you go with safe certificate of deposits or with riskier stock investments. The bottom line is that a Roth IRA is excellent for those looking at retirement in the near future and want a way to put their money away.