What is a Roth IRA? Sometimes the most basic financial concepts make the most sense in complex financial planning.

As a twist to the basic IRA, the Roth IRA is an Individual retirement account that allows you to invest money and earn interest on that money TAX FREE! If you follow the rules and don’t take the money out until you’re 59 and a half, and if you invest the maximum allowable $5500 each year, you can create a substantial nest egg for your future.

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DISCLAIMER:
Host Justin Goodbread, Certified Financial Planner, Certified Exit Planning Advisor, Certified Value Growth Advisor. He is a serial entrepreneur, author, speaker, educator, Investopedia Top 100 advisor, and business strategist with over 20 years of experience. Justin owns Heritage Investors LLC, a registered investment adviser with the State of Tennessee. Heritage Investors only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. This material is for general information only and is not intended to provide specific advice or recommendations for individuals. To determine what is appropriate for you, please consult a qualified professional. The Financially Simple podcast provides information, guidance, and support to Small Businesses in the United States….(read more)

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One powerful tool for saving for retirement that often goes overlooked is the Roth IRA.

So, what exactly is a Roth IRA? A Roth IRA is a type of individual retirement account (IRA) that allows individuals to contribute post-tax income towards their retirement savings. The key advantage of a Roth IRA is that, unlike traditional IRAs or 401(k) plans, withdrawals are tax-free as long as certain conditions are met. This means that any earnings and withdrawals from a Roth IRA are free from federal income tax, potentially saving investors a significant amount of money in the long run.

Knoxville’s CFP® Justin Goodbread, known for his expertise in financial planning and retirement strategies, strongly recommends considering a Roth IRA as part of a well-rounded retirement plan. Goodbread points out that one of the major benefits of a Roth IRA is the ability to earn money tax-free. This is especially advantageous for individuals who expect to be in a higher tax bracket during retirement, as they can take advantage of the tax-free distributions offered by a Roth IRA.

Another advantage of a Roth IRA is the flexibility it offers when it comes to withdrawals. Unlike traditional retirement accounts, Roth IRAs do not have required minimum distributions (RMDs), meaning that individuals are not forced to take out a certain amount of money each year once they reach a certain age. This can be particularly beneficial for individuals who do not need to access their retirement savings right away and wish to let their investments continue to grow tax-free for as long as possible.

In addition to these benefits, a Roth IRA also offers estate planning advantages, as assets in a Roth IRA can be passed on to beneficiaries tax-free as well. This can help individuals leave a larger inheritance to their loved ones without the burden of additional taxes.

Overall, a Roth IRA can be a powerful tool in building a tax-efficient retirement strategy. By working with a trusted financial advisor like Justin Goodbread, individuals can maximize the benefits of a Roth IRA and ensure that they are on track to meet their retirement goals. Goodbread’s expertise in financial planning and wealth management makes him a valuable resource for those looking to optimize their retirement savings and achieve financial security in their golden years.