Posted on 28 March 2012
By Mark Miller
The Roth IRA became a cause for Jeff Rose several weeks ago during a talk he was giving to college students. Rose is a financial planner and blogger, and he was speaking to a group of soon-to-be graduating seniors at his alma mater, Southern Illinois University.
Rose discussed savings, budgeting and investing tips. And during the investing discussion, he asked for a quick show of hands of those who had heard of the Roth IRA.
No hands went up. That isn’t really too surprising — after all, retirement investing isn’t the number one worry for college seniors. But the knowledge gap sparked an idea: a one-day online Roth IRA Movement reaching out to young investors via bloggers and social media.
Jeff also turned the whole affair into a good time with this video he posted, including some impressive dance moves:
I’m a bit late to the party, but glad to add my voice–because for young people, Roth IRAs are no-brainers.
You can contribute up to $5,000 annually to a Roth, so long as your income is below $110,00 (single) or $173,000 (married). Unlike a traditional IRA, contributions are taxed as ordinary income, but then grow tax free forever–along with what you earn on the accounts, assuming you don’t make withdrawals before age 59 1/2.
What happens when you retire? That sounds like its eons away — but trust me, it comes faster than you think. And at that point, Roths offer great flexibility. Unlike tax-deferred retirement vehicles, Roths have no Required Minimum Distributions (RMDS) after age 70 1/2. You can even pass along the assets to your heirs tax-free — although they would have to deal with RMD requirements.