Roth IRAs
Jim Whitehead (ejw@ics.uci.edu)
Mon, 18 Aug 1997 15:43:55 -0700
Reading in Newsweek yesterday, I learned about a new type of IRA, called
the Roth IRA, which goes into effect next year (it was created by the new
tax laws this year). As described in Jane Bryan Quinn's column (page 51,
"Dollars In, Dollars Out"), a Roth IRA, "you put away up to $2,000 annually
after tax ($4,000 per couple), hold for five years, then never pay a nickel
of tax on the money you earn -- if it's spent on your first house (a
$10,000 limit); used after you reach 59.5 or become disabled, or is paid
out when you die." It is also extremely easy to get access to the money in
emergencies.
While the amounts are pretty low, ($10k won't go far towards a house in SF
Bay) the fact that the money is entirely tax free makes this a really great
investment, even better than the current IRA in which earnings are taxed
when you withdraw, but are tax deductable from year-to-year.
- Jim