What Happens to Your Roth IRA When It Is Time to Retire?

A Roth IRA is a great option for many reasons, but many people wonder what to do with their account when it’s time to retire. Before you can begin to process what to do with that part of your retirement funds, it’s important learn a few things about the benefits a Roth IRA offers. Then we can tackle what happens to your Roth IRA when it’s time to retire.

Withdraw What You Need As You Need It

The Roth IRA does not require withdrawals to begin at a certain age. This means you can withdraw what you need, for example if you need a deposit for new home loans, and leave the rest in the account. This can be very beneficial because it gives your money the chance to continue growing. You may want to take money out on a yearly or monthly basis, depending on your needs. More importantly, if you have other retirement funds that do require withdrawals, you can use these funds before ever touching your Roth IRA. Imagine how much your money could grow if left in the account for another 10-15 years.

Rework Your Portfolio

If you’re going to leave money in your Roth IRA, and you certainly should, you need to rework your portfolio. If you haven’t done so already, you should reinvest your money into less risky stocks. This will help ensure that the money will still be there once your other sources of retirement funds have been used. While you can do this on your own, it’s nice to have a professional help you make the decisions. Note that he should HELP, not MAKE the decisions. You should always have a hand in making the final decisions so that you know where your money is going.

Consult an Accountant About Withdrawals

Taxes on a Roth IRA can be tricky and you should definitely consult your accountant when making withdrawals. Some distributions are taxable, while others aren’t. For example, earnings from the account are tax-free after the age of 59 1/2 only if the account is over 5 years old. Distributions from regular contributions (not conversions) are also tax-free.

A Roth IRA is a great option for those just starting to save for retirement and those that want to convert their traditional IRA. The ability to keep the money in the account gives retirees the upper hand as their reworked stocks continue to earn money. However, it’s important to discuss withdrawals with your accountant to make sure they are tax-free.