Hi Reader,
Most retirement accounts require withdrawals in retirement to be taxed as ordinary income. Roth IRAs allow withdrawals to be taken tax free.
With a Roth IRA, there is no upfront reduction in taxable income in the year of the contribution is made. These retirement accounts are funded with after tax dollars.
Once these funds are added to the Roth IRA, they grow without annual tax on dividends, interest, or capital gains. So long as the future withdrawals are “qualified distributions,” they are considered tax free.
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David N. Waldrop, CFP®
Owner of Bridgeview Capital Advisors, Inc. a Registered Investment Advisor.
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