Retirement Planning Expert in Farmington Hills Explains Tax Benefits Associated with a Roth IRA

Michael McGee, local financial advisor, recently had lunch with a group of people who work in his building. He was surprised to learn that several in the group had not started saving for their retirement. As the conversation continued, Michael discovered that they just didn’t understand the terms and the income tax advantages.
Michael explained the two basic types of IRA accounts that people generally set up. “There are many different types of retirement accounts out there; many people simply open a traditional or Roth IRA with their bank. There are tax advantages to both.”
“With a traditional IRA, you do not pay federal income taxes on the money that you contribute; however, you do pay federal income taxes on the distribution, or the amount that you withdraw. The advantage is that you save now; the disadvantage is that if you are in a higher tax bracket when you take it out, you pay based on the higher tax bracket.”
Michael went on to explain another option, “The Roth IRA was introduced under the Tax payer Relief Act of 1997. Owners of a Roth IRA do not deduct their contributions from taxable income; however; because the money was already taxed in the year it was earned, they do not pay income taxes on the withdrawals. As an additional bonus, they will not be taxed on interest and growth of the IRA.”
Michael explained more of the benefits to having a Roth IRA, “Owners are allowed to withdraw up to the total value of their contributions at any time without having to pay the 10% early withdrawal penalty or federal income taxes. People with Roth IRAs are not forced to take the minimum distribution after the age of 70-1/2. Some people even use a portion of their Roth IRA to purchase a home.”
Michael McGee is a financial advisor who understands all the terms and conditions and income tax advantages to investing in a retirement plan. Michael is well-qualified to analyze your financial situation and to advise you as to what type of investment account to have to secure your future. Read more articles on wealth building and investing at http://wealthbuildingdetroit.blogspot.com/

Contact:
Michael S. McGee, MBA
Financial Advisor
888 West Big Beaver Suite 850
Troy, MI 48084
248-720-0300
Email: mcgeeaug@comcast.net
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