ROTHs For Everyone

by Galia Gichon on August 27, 2012

money over timeAt first glance, the ROTH IRA is just for single people earning less than $122,000 and married couples earning greater than $177,000. Some of you may not fit into this category because you earned too much money.  Regardless, there are ROTHs for almost all of us.

Old 401k.  If retirement is still a distant goal, I do think it is worth to convert at least a portion of an old 401k to a ROTH.  The rationale is that taxes will most likely be higher in years to come and why not avoid them?  If you can, convert in a year where your income is lower.  Not every accountant agrees with me (that’s ok!) so check with yours.   Mine did and she is very conservative – by the books!

Teenager Earning Income.  If you have a teenager in your house, encourage them strongly to put as much of their earned income into a ROTH IRA.  Imagine what $1,000 saved at age 16 for a few years will be 50 years later (more than $30,000)!

ROTH 401k.  I’m seeing more and more of these at my clients’ workplaces.  You can choose just a portion of your 401k for this plan.  In this case, your income doesn’t matter.  If your company doesn’t offer one, ask your HR department to consider starting a ROTH 401k.

These are just a few points.  To discuss it further for your situation, call us or send us an email for an independent unbiased money appointment.

Share your thoughts on ROTHs in the comment section.

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