A Fresh Look at the Individual Retirement Account
If you are considering opening an individual retirement account, take a good look at the self-directed Roth. With a self-directed individual retirement account you get control of all the important decisions, and have a larger scope of investment types to help in building wealth. Too often IRA’s are captive of a brokerage house that disallows all but a small number of conventional investment choices …stocks, bonds, mutual funds, and perhaps their own funds . Wall Street has been volatile in this current economy, and the old way of investing has weakened many portfolios. With a self-directed individual retirement account, the account owner selects a custodian to house the IRA , and can choose one that allows alternative types of investments. As an investor, perhaps you are interested in real estate or precious metals, tangible assets with attractive profit potential and better returns. The custodian company makes the investment transactions in the name of the account owner, and control resides only with the owner. The self-directed Roth individual retirement account maintains that control for the account owner and merges that with the unique benefits shared by all Roth IRAs. To qualify for the Roth, your income level cannot exceed $120,000 filing single, or $177,000 married filing jointly. There are contribution limits of $5000 per year , with an extra catch-up amount of $1000 for persons over 50 years of age . Contributions to the Roth are not deductable on income tax, but provide a valuable payoff with tax-free distribution at retirement. So the profits from investments in the self-directed Roth individual retirement account grow in a tax-free environment and can be withdrawn without any additional tax penalty. Withdrawals can begin as early as age 59 ½ as long as the account has been open for five years, and there is no required distribution imposed at age 70 ½. Unlike with a Traditional IRA, the account owner can continue funding to the self-directed Roth individual retirement account indefinitely. Many investors who do not need the withdrawals may decide to let the funds grow as a heritage for their heirs. The individual retirement account was created to help individuals prepare for retirement. The self-directed Roth option puts the investor in control of determining that financial future.
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