Why A Roth IRA Should Be Part Of Your Retirement Income Plan

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Roth IRAs were created 20 years ago to give investors a way to invest for retirement that allowed for tax-free distributions after age 59 ½.

But they came with a catch.

These new IRAs were to be funded with after-tax contributions. Unlike traditional, tax-deductible IRAs and workplace retirement plans like 401(k) accounts, contributions to Roth IRAs are not tax deductible.

Since then, investors have debated whether it’s best to fund a Roth IRA or a traditional, tax-deductible IRA. Strong arguments can be made for both, but most financial professionals agree: whenever possible, the Roth IRA should be part of your retirement income plan.

Here’s why:

2018 Marks the 20th Anniversary of the Roth IRA

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This January marks the 20th anniversary of the Roth IRA. First made available to investors in January of 1998, a Roth IRA is an individual retirement account funded with after-tax dollars that provides tax-free growth and income for retirement.

Because Roth IRAs are such an important part of many people’s retirement income plan, I have decided to make 2018 The Year of The Roth.