The Roth IRA is a tax-efficient option for retirement savings. Earnings in a Roth grow tax deferred, and distributions are tax free, provided you have reached age 59 and have owned the account for at least five years. What many may not realize is that the Roth IRA offers another key, long-term benefit.
Unlike traditional Individual Retirement Accounts (IRAs) that have mandatory minimum distribution rules when the IRA owner reaches age 70, the Roth IRA does not require mandatory minimum withdrawals for the Roth owner. Therefore, the Roth owner can continue to fully reap the benefits of tax-free accumulation well into his or her retirement years while retaining the ability to take withdrawals only when necessary. In addition, a Roth owner can continue making contributions after age 70, provided the owner earns taxable compensation and his or her income is within the specified limit.
Bear in mind that eligibility for a Roth IRA begins to phase out when adjusted gross income (AGI) exceeds $122,000 for single taxpayers and $193,000 for married taxpayers filing jointly (complete phase out occurs when AGI exceeds $137,000 for single taxpayers and $203,000 for married taxpayers filing jointly).