Why there's never been a better time for millennials to contribute to a Roth IRA via CNBCMakeIt
Financial experts have long considered Roth IRAs ideal investment vehicles for young workers. And with tax rates as low as they're likely to be for the foreseeable future thanks to the 2017 Tax Cuts and Jobs Act, there has never been a better time to contribute to one, experts agree. Especially because it is almost certain that tax rates will eventually increase.
"That's the thing about the traditional 401: You're given the tax benefit now but from here forward, all that growth, that compounded appreciation, is taxed," Gugle says."Whereas if I'm in my 20s and I put that money aside and I'm not going to touch it for 20 to 30 years, that growth is not going to be taxed, which to me is the best deal."
Contributing to a Roth IRA in addition to a 401 or other tax-deferred account, assuming you can afford to do so, adds some diversity to your retirement income streams, which is always a good idea. "The rule states that after five years from account establishment you can withdraw your contributions and earnings penalty free at any age if you are using the proceeds for a first-time home purchase, up to $10,000," he says.
The ability to contribute begins to phase out for single individuals with a modified adjusted gross income of $122,000 per year for 2019, and completely disappears for those earning $137,000 or more.
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