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As a tax-efficient individual retirement account, a Roth IRA can be a great way to save for your future. While traditional IRAs require up-front tax reduction, any qualified distributions from Roth IRAs are tax-free. This can mean year after year of compound growth for your money.While a Roth IRA is a great way to save for retirement, the real question is whether it's the best savings option for you. Before you decide on a Roth IRA, consider your current tax bracket, as well as your projected tax bracket at the time of retirement. This type of IRA actually makes more sense if you expect your tax rate to increase between now and the moment you retire.
Many young workers just starting out in the workforce choose this savings plan because they can watch their after-tax dollars grow for decades and look forward to tax-free withdrawals. With a Roth IRA, once you hit retirement you are not required to take annual distributions from your account. This allows more flexibility with your money during the retirement years and also minimizes the taxes taken out of any assets you want to leave to heirs. Plus, depending on the account specifications, a Roth IRA can also make it easier to access your money before retirement.
Elements of a Roth IRA include:
Contact Columbia Bank to discuss the benefits of setting up a Roth IRA with one of our representatives. We'll help you grow your nest egg while you plan for a financially successful future.