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Joe Jaspers, CFP®
Vice President, Wealth Management
Carolinas Telco Capital Advisors
Located at Carolinas Telco FCU
9813 South Blvd, Suite 101
Charlotte, NC 28273
Phone: 704-391-5600
Toll Free: 800-622-5305, ext. 2608
Fax: 704-556-1652
Email: joe.jaspers@lpl.com
January/February 2020
Good Reasons to Consider a Roth IRA
If you don’t qualify for a tax-deferred traditional IRA because your income is too high or if you would rather not bet on federal income taxes being low in the future, when distributions would be taxed, you might want to look at a Roth IRA to help with your retirement strategy.
Who Qualifies
Your contributions to a Roth IRA are made after-tax, in contrast to pre-tax contributions you may make to a traditional IRA if you qualify by income. In return, you don’t pay income tax on distributions if you are at least age 59 ½ and have owned the Roth IRA at least five years. You also aren’t required to begin minimum distributions (RMDs) during your lifetime, which you must with a traditional IRA at age 70 1/2.Anyone can contribute to a traditional IRA, but annual income determines your eligibility for a Roth. In 2019, the limit was $203,000 in modified adjusted gross income if you file a joint tax return and lesser amounts for other filers. There is no income limit for rollovers from a traditional IRA, but you will pay income tax on the rollover amount, so it may be best to do this in years when you have lower income.
One similarity between the two IRAs is that potential growth is tax-deferred. Withdrawals from a Roth IRA become tax-free once you meet the holding requirements.
Why This Works
If you’re young and unsure how much money you’ll need in retirement, and especially if you believe income tax rates will be higher in the future, a Roth IRA may be for you. Older workers may also prefer a Roth IRA for a few reasons. First, the obvious: tax-free distributions. Second, you don’t have RMDs, which may be important if you have other retirement income. Third, you can continue contributing to a Roth after age 70 1/2 if you have earned income. You can’t do that with a traditional IRA.A Roth is a powerful estate-planning tool, too. Your beneficiaries would receive tax-free income that can be stretched over their lifetime.
Pay taxes now or pay them later? Talk to your financial professional to help you make that choice.
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Carolinas Telco FCU and Carolinas Telco Capital Advisors are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Carolinas Telco Capital Advisors, and may also be employees of Carolinas Telco FCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of, Carolinas Telco FCU or Carolinas Telco Capital Advisors. Securities and insurance offered through LPL or its affiliates are:
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