A Roth IRA (Individual Retirement Account) is a type of retirement account that offers tax-free income in retirement. A Roth IRA is unlike a Traditional IRA, in that there is not an up-front tax deduction. Roth IRA’s are ideal savings vehicles that can be held in addition to a Traditional IRA, especially if you expect your tax rate to be higher during retirement than your current tax rate.
However, there are limits as to who can contribute to a Roth IRA based on modified adjusted gross income. For those who are single and head of a household, they must earn less than $110,000 annually. For those who are married and filing jointly, annual income must be between $173,000 and $183,000. Any amount above this does not allow for contributions. In 2013, the maximum contribution amount was raised to $5,500 and for those over 50 the maximum contribution amount was raised to $6,500.
Investments in a Roth IRA can include any combination of stocks, bonds, mutual funds and precious metals such as gold and silver. With so much volatility in the stock market over the last several years, and with gold and silver being close to record prices, you may be wondering about making an investment in your IRA in precious metals. As part of your IRA, precious metals including gold and silver are solid choices for now and in the future.
Having precious metals such as gold and silver in your portfolio means you have investments that do not perform exactly as the stock market does. Precious metals tend to thrive when there are periods of instability. While there’s no way to tell what gold and silver might do in the future, it is always a good idea to diversify your investments and therefore minimize the risk you are taking overall.
Gold and silver are actual commodities, and even if they do level off certain years or decline, they have the possibility of increasing in the following years. There are a few ways you can purchase gold and silver in your portfolio. Many bullion coins can be held in an IRA. Gold and silver coins must be almost pure. Coins that qualify include American Buffalo gold coins, Canadian Maple Leaf gold coins, Mexican Silver Libertads and American gold and silver Eagles.
Before moving forward with a Roth IRA, it’s a good idea to make sure you qualify. If you do, there’s flexibility with this type of account, meaning you can withdraw your contributions you’ve made without taxes or penalties. You must reach age 59.5 before you can take out any earnings tax free and penalty free. If you take the long term approach to investing, to balance your portfolio include precious metals such as gold and silver. Roth IRA’s are ideal investment vehicles for those who are thinking ahead to retirement, want to benefit from decades of tax-free growth and plan to potentially leave their assets to their heirs, tax free.