The Disadvantages of a Roth IRA

  • Upfront taxes. The advantage of Roth IRAs is that they let investors eventually make tax-free withdrawals. However, initial Roth IRA contributions are still taxed, which can make Roth IRAs a less-than-ideal option for Californians struggling to save money.
  • Low maximum contributions. Roth and traditional IRAs are both subject to maximum contribution limits of $6,000 per year or $7,000 per year for people 50 or older.
  • Income limitations. Traditional IRAs are open to earners from every income bracket. Roth IRAs, conversely, are subject to an income limitation and phase-out, starting at $124,000 for single taxpayers and $196,000 for married couples filing jointly.

 

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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