Get an Idea about Roth IRA
Without doubt Roth IRA is the one of the most popular
investment plans which is exclusively aimed at giving a better deal to persons
who are retiring or planning for their retirement. It is perhaps one of the
only plans of its type which gives the customer freedom to grow his savings in
tax deferred manner and enjoy the benefits of pension without having to pay any
tax. This is in total contrast to the traditional IRA plans where the person
has to pay taxes even on withdrawals or pensions which he is eligible after his
retirement.
Logically, an active and working person would not mind paying tax, but taxing a person who is in his retirement is not the best way of rewarding a person who has put in his best years of life for productive purposes. When a person retires, obviously his income also goes down and taxing him during this period is not justified to say the least. Hence, this is where the plans and schemes of Roth IRA are revolutionary and path breaking.
Though, there are a lot of benefits associated with these plans, of course there are some disadvantages and pitfalls about which a customer should be aware so that he does not fall a victim to it. It is therefore always advisable to go through the product features in great detail and only then decide to invest in it. This is all the more applicable for financial products such as Roth IRA. The basic flaw with this product is within the tax free withdrawals itself. The benefit of tax exemption does come to the customer, but it comes after a long time when the customers start withdrawing the funds after maturity or after meeting the stipulated pre-maturity withdrawal norms. Hence it is a case of waiting too long for a small benefit in terms of tax- exemption.
Logically, an active and working person would not mind paying tax, but taxing a person who is in his retirement is not the best way of rewarding a person who has put in his best years of life for productive purposes. When a person retires, obviously his income also goes down and taxing him during this period is not justified to say the least. Hence, this is where the plans and schemes of Roth IRA are revolutionary and path breaking.
Though, there are a lot of benefits associated with these plans, of course there are some disadvantages and pitfalls about which a customer should be aware so that he does not fall a victim to it. It is therefore always advisable to go through the product features in great detail and only then decide to invest in it. This is all the more applicable for financial products such as Roth IRA. The basic flaw with this product is within the tax free withdrawals itself. The benefit of tax exemption does come to the customer, but it comes after a long time when the customers start withdrawing the funds after maturity or after meeting the stipulated pre-maturity withdrawal norms. Hence it is a case of waiting too long for a small benefit in terms of tax- exemption.
