This could be the most important question when deciding on your investment in an IRA.”
The good news is that all Roth IRA investments are eligible for the Roth contribution limit, so if you have an IRA of this type, you’ll have enough to invest in a Roth account for the next 20 years. If you’re younger than 50, you could still invest in a Roth IRA until you reach age 70½.
But, for those in their fifties or even their sixties, it’s often possible to roll the IRA into a traditional IRA without paying taxes or penalties. This is a feature that some employers offer to their workers, but many don’t—or prefer not to—because it’s so difficult to pull off under their current tax rules. But this doesn’t mean that tax-advantaged Roth IRA investments cannot help build your retirement nest egg.
“If you want to buy your first home or start a small business (without investing) then, depending on where you work, some 401(k) plans and some IRAs support passive investing—that is, they allow you to leave all your money in a tax-advantaged retirement account, but only to pay a 0 percent investment-fee to the IRA trustee who then invests the proceeds in different stocks, mutual funds, bonds, or other investments in your name. So, by setting up such an account in your name, you can invest your money without paying a financial-account broker an extra fee. While the funds are invested in your name, they won’t go into a traditional taxable IRA.
“An IRA’s tax benefit is based on several conditions, including its age, which is based on the year in which you contributed your 401(k), how much money you contributed (your total contribution) and, most importantly, the value of the investments in the account over the course of that year,” explains Taxpayers for Common Sense on Rollover Contributions to IRAs. “These conditions make the IRAs eligible to rollover. Depending on your contribution rules, rollovers could be the right way to invest for you.”
So, as long as you do your research, and have the funds to spare, and are in your early thirties, you should consider investing in a Roth IRA. It also makes financial sense to invest in an IRA because it typically has a low maximum contribution that makes it easy to invest in a tax-advantaged account. Roth IRAs have been criticized for being less expensive than IRAs with more modest 401