In the world of retirement accounts, Roth IRAs are the favored child. What’s not to love about totally tax-free growth on your retirement savings? And if you ask a financial advisor about their disadvantages, the list is likely to be mighty short.

Still, Mr. Roth isn’t always Mr. Right.

How Roth IRAs work

Roth IRAs are individual retirement accounts used to save towards retirement. They tend to be attractive because you can invest after-tax dollars, meaning money you’ve already paid taxes on, into the account and enjoy tax-free growth and withdrawals. Some people love the idea of not having to worry about taxes when they withdraw their savings in retirement. That said, everything has a downside and Roth IRAs have their fair share.

Roth IRA pros and cons

There are some things you need to know — primarily positive and negative tax implications — if you’re considering a Roth IRA. Check out the pros and cons of this investment type below.

You enjoy tax-free growth on your investments. Since you paid taxes upfront, you don’t have to pay when you withdraw at age 59 1/2.

There is no tax deduction, as you pay taxes before depositing the money into a Roth.

During your lifetime, you’re not subject to required minimum distributions, meaning you never have to make withdrawals

There is an income limit. Your Modified Adjusted Gross Income must be $144,000 or less for single tax filers and under $214,000 for those married people filing jointly in 2022.

You can withdraw your contributions penalty-free at any time.

While you can withdraw contributions, you can’t withdraw earnings before age 59 1/2.

You have diversification in retirement, so all of your accounts aren’t tax deferred.

The maximum contribution is relatively low. You’ll still need other retirement vehicles to save enough for retirement.

The pros of Roth IRAs

Here is a breakdown of the pros listed in the table above.

Your savings grow tax-free

When you hit retirement age, you won’t have to pay taxes on withdrawals. That can give your savings a powerful…

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