RetireSimply's Guide to Roth IRA.
Tax benefits of the Roth IRAinclude:
You'll notice from the indentation of the bullets that we've chosen to include the other Roth IRA tax benefits within the main premise.
The main premise, tax-free retirement savings, has residual benefits for both social security management and estate planning.
You can work and receive Social Security benefits at the same time. Not all retirees choose to completely stop working. In retirement, many "retirees" simply cut back on the amount of work that they were doing, but not actually stop all work. For this reason, the IRS has set income limits for those who have not reached full retirement age. For people under full retirement age, the SSA deducts $1 from your benefits for every $2 earned in excess of $14,160 - the 2011 Social Security income limit. For workers also wishing to cash in on retirement plans, additional income can lead to additional taxes. For example, any gains in a personal trading account or in a Traditional IRA will add to your adjusted gross income for the year. So, withdrawing amounts from those plans is not only taxable, but it increases taxes on your other income, so it effectively reduces every dollar you earn. However, with a Roth IRA, qualified distributionsDO NOT add to your taxable income base. This means you can withdraw as much as you in any year of retirement without fear of increased taxes.
If you converted or rolled over amounts to your Roth IRAs in 2010 and did not elect to include the entire amount in income in 2010, you must include part of the amount in income in 2011.