Confusing rules, misunderstandings about definitions, and general retirement “wisdom” can cause many folks to MISS OUT on taking advantage of the incredible benefits of Roth IRAs.

In this video, we identify a few of these misconceptions (3 to be exact) and easily break them down for you so you can better understand the potential power of Roth accounts, and realize that they are truly, right at your fingertips for you to use.

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DISCLAIMER: This video is only helpful hints and education. It is not specific tax, legal or investment advice. Before considering acting on anything you see in this video, first consult with your tax, legal or investment advisor. While the information expressed in this video is believed to be accurate, neither Bryan McCloskey, MS, CASL® nor Revisionist Wealth/Revisionist Wealth Advisors, LLC make any guarantees to its accuracy….(read more)

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As retirement planning becomes a more prominent consideration among many people, there are a lot of misconceptions surrounding retirement plans, especially Roth IRAs. While Roth IRAs are a powerful tool for retirement savings, there are many Roth IRA myths that can impact people negatively. Here are three Roth IRA myths that can cost you lots of money in retirement:

Myth #1: You can only contribute to a Roth IRA if you’re a high earner

This myth is not true at all. Anyone can contribute to a Roth IRA as long as they meet the income eligibility requirements set by the IRS. For example, in 2021, the maximum contribution amount for a Roth IRA is $6,000, or $7,000 for people aged 50 and older. However, there are no income restrictions for traditional IRA contributions.

Myth #2: You can withdraw your contributions at any time tax-free

The second common myth about Roth IRAs is that one can withdraw the contributions tax-free. This is only true to an extent. It is essential to understand that Roth IRA withdrawals are divided into two categories: contributions and earnings.

While you can withdraw your contributions at any time without paying taxes or penalties, you cannot withdraw your Roth IRA earnings tax and penalty-free until you’re at least 59 ½ years old and have owned the account for at least five years. Thus, it is very important to keep track of both the contributions and earnings in your Roth IRA to avoid penalties and additional taxes.

Myth #3: Roth IRAs always make money

Roth IRAs are an excellent tool for retirement savings, but there’s no guarantee that you’ll always make money over the investing period. Many external factors, such as market conditions, inflation rates, and taxes, can affect your Roth IRA’s returns.

Thus, it is best to manage Roth IRAs strategically and keep a long-term view of investment planning. Work with a financial advisor to minimize investment risks and optimize your Roth IRA investments to achieve your retirement goals.

In conclusion, Roth IRAs are an excellent retirement savings tool, provided you follow the correct investment strategies. However, it is essential to dispel the myths surrounding them to make informed investment decisions. Ensure that you utilize your Roth IRA effectively and maximize your savings by seeking professional advice. Avoid falling into these myths and watch your money grow as you prepare for your golden years.