When talking about the Roth IRA there are many things people misunderstand. One of them is the 5 year rule that applies to the Roth IRA. Any contributions that you make to a Roth IRA are ALWAYS available for you to withdrawal at anytime. Even if you are not currently of retirement age you can still take out any contributions you make to a Roth IRA. The 5 year rule applies to those that are currently of retirement age only and affects the gains in the Roth.
The other is the tax ramifications of withdrawals from a Roth IRA. Of course when you retire at 59.5 or older you can withdrawal any amount you want from your Roth IRA. If you withdrawal only contributions prior to that age then you are not required to pay any tax or penalty. It is only on the gains that you would pay a 10% penalty if you withdrew that early.
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retirement planning is one of the most important steps you can take to ensure financial security in the future. One of the most popular retirement savings vehicles is the Roth IRA, but there are still many misconceptions about it that can lead to costly mistakes. Here are two things people misunderstand about the Roth IRA for retirement.
First, many people mistakenly believe that the Roth IRA is only for those with high incomes. This is not true. While there are income limits for contributing to a Roth IRA, those limits are much higher than many people think. For example, in 2021, a single person can contribute up to $6,000 to a Roth IRA if their modified adjusted gross income (MAGI) is below $125,000. That limit increases to $7,000 if the MAGI is above $125,000.
Second, another common misconception is that the Roth IRA is only for those who are already retired or close to retirement age. This is also not true. The Roth IRA is a great way for younger people to save for retirement, as contributions are made with after-tax dollars and any earnings are tax-free. This means that younger people can benefit from the tax-free growth of their investments over time.
In conclusion, the Roth IRA is a great retirement savings vehicle for people of all ages and income levels. It’s important to understand the income limits and other rules that apply to the Roth IRA so that you can make the most of this valuable retirement savings tool.
Thank you for the information…I wanted to pay off my mortgage and now I dont need the 72t rule!
Can I have the Old School ZERO fan on your mantel please? Brings back a lot of memories
How are we taxed on dividends paid to dividend stock in a roth IRA if we choose to withdraw them instead of reinvest?
So how do we differentiate a Roth ira from a regular ira. The money we put in a regular ira is also coming from our taxed salary which we deposit into our bank account can you answer that, please?
thanks you.
Can you sell funds and use the money to buy other funds in a Roth IRA?
I know I’m late but I have a question if the s&p 500 ever dipped really bad would I loose my contribution
Do I pay taxes on the dividends earned in a roth ira?
Can we pull out for all contributions made to date or only for the current year?
Great informative video sir you have cleared up some misconceptions that I had concerning how a Roth Ira works, thank you!
Is having 50% cash in your roth ira bad?
Hey Dustin , I know I’m late but I was wondering if I wanted to sell an index fund that made gains would I be taxed on it ? (It’s a Roth IRA if that matters). I’ve been looking everywhere and gotten different answers.
Don't think it matters but does it matter taking stocks that are short in the IRRA or 401k and plan on transferring it to Roth in Jan. That portion becomes long in Feb but plan on transferring it Jan 2.
Lots of promo talk, little real useful info.
Do I pay tax on my money in Spaxx in my roth ira? Fidelity is now all trade free like stocks, mutual funds, etfs? What about EXPENSE RATIOS? Does fidelity have any account fees or fees in particular? Not sure how to read prices, is it the NAV? And can I buy fractional shares in my roth ira? Is there a minimum deposit/ starting fee? Can I just start off with $50 in my roth ira? Does roth ira have drip?
if you role over a roth 401k to a roth IRA and wait 5 years can you take the gain from the 401k portion out?
Thanks for info! Question though. I opened a Roth IRA in Feb 2016 and made a contribution to 2015. If I want to tap my Roth for a down payment is the 5yr rule satisfied now that it's 2020? Thanks!
Do stock investments count towards your IRA limit?
Where are u located
putting money in your roth ira just to take it out defeats the whole purpose of it (IMO) let it sit and forget to see the most gross over the next 30-40 years and youll be thankful when its time to retire. but dont wish your life away for that money since money cant buy more time.
Theoretically, what if you've lost money in an IRA? Would I be able to take out my initial amount, leaving my account balance in the negative?
Shouldn't really use a Roth IRA for short term investing like buying a house in under 5 years. This is bad financial advice.
If i empty out my roth ira for a down payment on a house n close out the account will i get penalized?
Are the dividends taxed as income through the Roth???
Who can answer on such a question: I'm 65y.o. , invested some my Roth IRA money in stocks. How it taxable in case I gain a profit, and in case I lost money it's deductable from my income tax?
What should not include in my Roth?
Question, I retired at 53. Can I still contribute to my Roth IRA if my wife works?
I read that the other day about financial institutions: peter lynch comments-I am paraphrasing — " when all else is equal, look at the companies main lobby. If they have fancy paintings, and a limo , or jet –run like hell",,,Great video by the way
I think the 5 year rule confusion is driven by the difference between a contribution vs a Roth conversion. If you convert $100K currently in a traditional IRA over to a Roth, then you can't touch that $100K conversion for five years.
Hey Dustin… I like your Style… I have a unique situation. I'm 73 years old, Single, retired…no savings, I collect SS and a Veterans Disability about $2500.00 per month. I live in Oregon. I just opened a Roth IRA at my Ameritrade Account… and I am going to fund it with about $1,000.00 to 1,500.00 per month, but is my money Post Tax ? I don't pay any taxes on my SS or Va. Disability. Well, I guess I already paid taxes on the money I am collecting with my SS. I have never talked with anyone about any finances ! LIKED/SUBSCRIBED !
The confusion I have is 401K Roth vs Roth IRA, limits and Taxation for each
With a Roth IRA, can I take out my money earlier than retirement age? Meaning can I retire early?
It's taken me so long to find somebody that was able to speak the rules plain and simple. Your money in can come back out without tax pr penalty, anytime, for any reason. Video liked!
So when do we pay the tax to IRS. Is it automatically paid or do we pay it by April 15th when we file are w-2's ?
I wish I knew this 4 years ago when I started to save for a house.
I want to speak to you please
My question is the money I put into the Roth IRA is going to get taxed right? Is the amount I paying in taxes to put my money into that account worth the amount of money I will be making yearly? I’m guessing I’ll put in $6,000. Now 1/4 of that will get taken out because of taxes. So I’ll have about $4,500. Am I going to make at least $1,500 in interest? Also how much of the money I’m paying in taxes can I deduct when filing taxes?
Already know this.
After 59 1/2, is taking money out of the ROTH IRA considered income although you don't pay taxes on it?
So does this basically mean that a Roth IRA is like a Savings Account but better because it generally pays more than a savings account or CD? If so, what's the catch?
Hi Dustin
Quick question for you. Can I pull out my contribution which is $5500 even though I invested that money on stocks and ETF?
What about dividend income if I'm under 59 can I collect dividend income without penalty?