It’s easy to put off thinking about retirement until you get your first job that offers a 401(k). But if you want to save earlier — or in addition to what you can put in a 401(k) — you have some options.

One of them is a Roth IRA. What is it that separates it from other accounts? Here’s what to know.

  1. IT’S AN INDIVIDUAL RETIREMENT ACCOUNT WITH SPECIAL TAX ADVANTAGES

    IRA stands for “individual retirement account,” and there are two types: a traditional and a Roth. They’re similar in that they’re both retirement accounts anyone can open, but different in their tax implications.

  2. ROTH CONTRIBUTIONS ARE MADE WITH AFTER-TAX MONEY

    A Roth IRA uses after-tax dollars, meaning you don’t get a tax break on your contributions now like you would for contributions made to a traditional IRA or 401(k). However, that also means you’ll never be taxed on the money again. It will grow tax-free and you can withdraw it tax-free as long as you’re 59½ or older and have owned your Roth account for at least five years. Note that contributions made to traditional IRA or 401(k) accounts will be taxed when you take the money out in retirement.

    This makes a Roth IRA a particularly good option if you’re earlier in your career and likely in a lower tax bracket than you will be by the time you retire.

  3. YOU CAN OPEN ONE WHEN YOU'RE YOUNG

    The more time an investment has to grow, the more money you can make. As long as you have earned income in a year, you can contribute as much as you made that year to a Roth IRA up to $5,500. That means even children could contribute — perhaps from a summer job or babysitting.

  4. YOU CAN TAP YOUR FUNDS AT ANY TIME

    Another special benefit to a Roth IRA is that you can always access your basis — the amount of money you’ve paid into the account — without paying additional taxes or penalties, regardless of how old you are. Keep in mind, however, that withdrawals could mean missing out on investment growth on that money.

  5. THERE ARE LIMITS

    One of the biggest drawbacks of the Roth IRA is its contribution limit in a given year. In 2017, the cap is $5,500 plus an extra $1,000 catch-up for those 50 or older. This is your max contribution across both a traditional and a Roth IRA, meaning if you have both types of accounts, your total contributions between the two can’t go over $5,500. (Compare that to the $18,000 contribution cap with a $6,000 catch-up for a 401(k).) If you contribute more than the limit in a given year, you may have to pay a penalty.

    Also, your qualifications are based on your income and tax-filing status. If you earn more than $118,000 in a year ($186,000 if you’re married and filing jointly), the maximum amount you can contribute each year starts to go down; once you earn $133,000 ($196,000 if you’re married and filing jointly), you can’t contribute to a Roth IRA.

  6. YOU CAN PASS IT ALONG

    Unlike other types of property, IRAs normally don’t pass to your heirs through a will. Instead, you can name a beneficiary they will pass to. So remember to designate a primary and contingent beneficiary (the person who gets the money if the primary beneficiary isn’t able to) for your account — and review it at least annually or whenever you experience a major life event like a birth or adoption, marriage, divorce or death. Without a beneficiary designation, whoever gets your IRA may lose some tax advantages.

One final thing to remember about a Roth IRA is that, like with any savings account, you can make saving a no-brainer by automating your contributions with each paycheck. You’ll want to set up your investment mix based on your current financial situation, goals and risk tolerance. A financial professional can help you iron out the details.

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