Ring In the New Year with a Roth IRA

Happy new yearSharron Epperson, who is CNBC’s senior personal finance correspondent, stressed the importance of retirement planning in the coming year — with two products in particular.

Need a financial resolution for 2015? Save as much money as you can in a Roth IRA. One of the best things you can do to set yourself up for financial success in the future is to be strategic with your savings.

According to a recent article at gobankingrates.com, titled CNBC’s Sharon Epperson on Why You Need a Roth IRA in 2015, in the event of an emergency make sure you're able to withdraw your contributions at any time without incurring penalties or fees. This is also a terrific way to save for retirement, because you might be in a higher or lower tax bracket when you’re in your 60s. Who knows?

With a Roth IRA, typically you can withdraw money tax-free after age 59½. If you qualify for a Roth, you could save up to $5,500 in 2015, or $6,500 if you’re 50 or older. Don’t forget that you have until April 15th to make your contributions for 2014.

Another type of Roth account for retirement savings is a Roth 401(k). This version doesn't have any income limits. If your job has this type of retirement plan (many large employers are expected to offer a Roth 401(k) option in 2015), you can contribute up to $18,000 next year (or $23,000 if you’re 50 or older).

Unlike a traditional IRA or 401(k), Roth contributions won’t reduce your taxable income; however, your overall tax savings (tax-free withdrawals) are likely to be much greater when you retire.

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Reference: gobankingrates.com (December 6, 2014) CNBC’s Sharon Epperson on Why You Need a Roth IRA in 2015


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