3 Reasons I Love a Roth IRA
Tax-free growth. Tax-free withdrawals. More flexibility
What This Means
What are the biggest benefits of a Roth IRA?
A Roth IRA is one of my favorite accounts for building long-term wealth.
You don’t get a tax deduction when you put money into a Roth IRA. You contribute after-tax dollars.
But in exchange, you get some pretty powerful benefits.
Number one — tax-free growth.
Once the money is inside the Roth IRA, your investments can grow without creating a current tax bill. You can buy and sell investments inside the account without paying capital gains taxes along the way.
Number two — qualified withdrawals are completely tax-free.
If you follow the Roth IRA withdrawal rules, qualified distributions come out tax-free. That means you can potentially spend decades building wealth and then use that money in retirement without creating additional taxable income.
Number three — flexibility.
This might be my favorite.
Roth IRAs don’t have required minimum distributions during the original owner’s lifetime. You’re not forced to start taking money out simply because you reached a certain age.
You decide when you want to use it.
And if you don’t need the money?
Leave it alone and let it continue compounding.
That flexibility can also make Roth money extremely valuable when planning retirement income. Having both pre-tax and after-tax accounts gives you more control over where your income comes from and how much taxable income you create in retirement.
I have plenty of clients with significant pre-tax retirement savings. There’s nothing wrong with that. But when we have the opportunity to build tax-free money alongside it, I love having that option.
Common Questions
When can I withdraw money from a Roth IRA tax-free?
Your contributions can be withdrawn tax-free at any time. Earnings are generally tax-free after age 59½ once you’ve satisfied the 5-year rule.
How much can I contribute to a Roth IRA?
For 2026, you can contribute up to $7,500, or $8,600 if you’re 50 or older, assuming you have enough earned income and qualify based on the Roth IRA income limits.
Can I contribute to a Roth IRA if I have a 401(k)?
Yes. Having a 401(k) does not prevent you from contributing to a Roth IRA, as long as you have eligible earned income and meet the Roth IRA income requirements.
What happens to my Roth IRA if I never need the money?
You can leave it invested for your entire life since Roth IRAs have no RMDs for the original owner. When you die, the account can pass to your beneficiaries, subject to inherited Roth IRA rules.
Remember This:
A Roth IRA gives you options later in life that few other accounts can match.
Keep Learning:
How IRAs Are Taxed — And How to Pay Less: Traditional and Roth IRAs are taxed very differently. See how contributions, withdrawals, Roth conversions, and RMDs can affect your taxes in retirement.
How Powerful Is Compounding? : See why compounding becomes more powerful over time—and why giving your investments decades to grow can make such a big difference.