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Know Your Roth IRA Options

Are you planning to invest in a Roth individual retirement account? You may have heard all the hype about the Roth IRA system and how it can benefit you, but are you really prepared to invest in a Roth IRA and not end up regretting your investment in the long run? You should firmly confirm your resolve before you make your final decision and know your different Roth IRA options. First of all, just what is a Roth IRA? In case you were not aware of this fact, the Roth IRA is a type of individual retirement account with additional tax benefits and a different tax treatment when compared to a traditional IRA.
The options that you should be aware of when it comes to a Roth IRA are the different Roth IRA withdrawal requisites that will allow you to make qualified early withdrawals without being subjected to a huge penalty or tax assessments as well as the types of Roth IRA that you can invest in. Generally, there are two types of IRA that you can choose from. The easiest type of Roth IRA is a policy Roth IRA that is available as financial plan from an insurance company or some other type of financial institution. This particular type of Roth IRA is managed entirely by the financial institution with no participation from the account holder except the payment of monthly premiums and some annual or monthly reports from the institution for the purposes of transparency. This is beneficial because the account holder will be guaranteed a certain amount of money growth or income for his premium for each year of prompt payment.
Another type of IRA is known as a self directed IRA. In a self-directed IRA, there is no need to go through channels. You simply declare some of your assets as contributions under the Roth IRA system and manage your account on your own. This is far riskier but it also allows for more flexible investments and ultimately, bigger returns.

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One Response to “Know Your Roth IRA Options”

  1. Kevin@RothIRA on July 26th, 2011 6:36 pm

    The self-directed will probably be the better route for most people. The Roth’s run by insurance companies are invested in annuities and those usually have fees for withdrawal, especially in the early years. And those fees can be steep like 7 or 8%.

    That largely removes the option to withdraw funds from the Roth, or even if you decide to switch insurance companies if you aren’t happy with the investment.

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