How to put more money into the Roth IRA

During the months from the new year's bell ringing on January 1 to the tax filling deadline, there's almost only one of the months that can help your tax situation.

Common retirement plans include:

Traditional IRA

Roth IRA

SEP IRA

401k profit sharing:  401k employee contribution and company match need to be completed by December 31.

Defined contribution plan: Different accounts can be a very different amount, small thousands of dollars, as many as millions, everything is possible.

Cash balance plan

How to put more money into the Roth IRA?

For Roth IRA, the money you put in will be taxed, but the money you make in the future will no longer get taxed.

Roth IRA can be an alternative to the 529 Education Fund

Many families with small children ask: How much 529 should I save? 529 there are so many kinds of plans, which one should I save? In fact, if there aren't too many young children in the family  and parents can save enough Roth IRAs , it's perfectly possible to replace 529 with Roth IRAs. Because the principal portion of the Roth IRA is readily available, there is no tax or any penalty.

Or use the previous example: now put in 200,000, and then the twenty thousand dollars rise to a million. We can always take out $200,000 of the principal to send the children to school, and let the part of the 800,000 gain remain in the Roth IRA. By contrast, 529 is also the time to pay taxes when put in, after which gain does not pay taxes, but only for educational purposes. If the only child gets the full prize, then the money in 529 is left to the grandchildren. Roth IRAs, on the other hand, are educational retirements, with the principal portion flexible and, if needed, an education fund and a pension for yourself if you can't use it.

Roth IRA's principal can be used at any time

Let's extend the first point a little: most pensions must be used after they reach retirement age (currently 59.5). The principal portion of the Roth IRA can be used at any time, without any justification, without any taxes or penalties. So, I can't imagine any reason not to let roth IRA go. Try to put more Roth IRA when you want to put it, in case of when to use it, buy your own house, cash to rob the investment house, you can take out the principal part directly, the profit part is still in the Roth IRA.

Roth IRA no need dat minimum distribution

Younger readers may not have heard of the pwed minimum distribution (RMD): most pensions must start taking money from their accounts when they reach their 70s and a half. The amount of money taken each year is determined by the amount and age of the account. If you do not take the amount of RMD, half of the RMD amount will be fined.

The RMD is an important tool for the IRS to prevent the disparity between rich and poor: not only are wealth transfers subject to bonus and inheritance taxes, but pensions are best for every generation to eat up and not leave too much for future generations. For example, force all 401k owner after 70 years old or take out you.

The Roth IRA, on the other hand, is a fantastic pension with no RMD restrictions.

Note: Roth 401k still has RMD.

To sum up, the Roth IRA is May's super-minded: there is no tax on how the money is grown, the principal portion can be taken out at any time, and the money in the account can be properly transferred to the next generation.

However, such a good tax-saving account, of course, the amount of money put in each year is limited. Otherwise, if you put all your money in the Roth IRA and invest in it without paying taxes, the IRS will drink the northwest wind.