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Rashmi Jain July 26 th 2006 EDIT 705

Instructional Design. Roth IRA. Rashmi Jain July 26 th 2006 EDIT 705. Roth IRA. An Individual Retirement Account. Roth IRA at a Glance.

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Rashmi Jain July 26 th 2006 EDIT 705

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  1. Instructional Design Roth IRA Rashmi Jain July 26th 2006 EDIT 705

  2. Roth IRA An Individual Retirement Account Roth IRA at a Glance "Investing your money" means making it grow. Depending on your goals for your money and how soon you plan to use it, you may want to accumulate interest or otherwise increase what you have so that you end up with more than you actually put away. Everyone should have a "nest egg" set aside for emergencies or achieving goals. Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator

  3. Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator What is Roth IRA? • A Roth IRA (Individual Retirement Account) named after • its proponent, former Sen. William V. Roth, Jr. is a • retirement savings account with specific tax benefits • You can actually get some of your money out before you • hit retirement age. For this reason, it can be a good • investment for younger investors who are years away • from the retirement age of 65.

  4. Who can invest in Roth IRA? . Maximum Allowable Contribution AmountsThe chart describes the maximum allowable contribution amount to a Roth IRA for the category that applies to your household. Your eligibility to contribute to a Roth IRA is also subject to income limits. Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Eligibility Based on Annual Modified Adjusted Gross Income Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator Roth IRA Eligibility Calculator

  5. Roth IRA Eligibility Calculator Federal Income Tax Filing Status: Single Married Current Age: Spouse Your Your adjusted gross income (AGI): $ Calculate Eligibility Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator STEP 1 Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator

  6. Roth IRA Eligibility Calculator Help? Your Contribution Roth IRA $4,000 Spouse Roth IRA Eligibility Calculator Help? Federal Income Tax Filing Status: Single Married Your Current Age: 30 Your adjusted gross income (AGI): $60,000 Calculate STEP 2 STEP 3

  7. Advantages of Investing in Roth IRA • Contributions can be made at any age • Eligible individuals may contribute up to a specified limit annually (refer to the contribution limits) • Contribution eligibility is not restricted by active participation in an employer’s retirement plan • Contributions are post-tax, but growth is tax-free; once you put your money in, you never pay taxes again • Withdrawals upon death or disability, for first time home-buying or after age 59 ½ are tax-free provided a 5 year wait has occurred Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator

  8. Disadvantages of Investing in Roth IRA • Contributions are limited each year for • each individual (refer to the contribution limits) • You will be subject to penalties if you withdraw and your account has been open less than five years or if you are under age 59½. Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator

  9. How Roth IRA works? Let us look at a couple of scenarios to understand how Roth IRA works: - Scenario 1 A couple invests $4,000 annually from age 26 to 45. They contribute a total of $80,000 to their IRA account. After age 45, they contribute nothing more to their retirement. If they earn a 10% annual return on their investment, the couple will have over $1 million in their account at age 60! Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator Scenario 2

  10. Scenario 2 An individual invests $2,000 annually from age 16 to 26 He will contribute a total of $22,000 to his retirement account. They contribute nothing more after age 26 The account will have grown to over $1 million by age 60 with a 10% annual return. The power of compound interest is even more dramatic the earlier you begin saving Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator

  11. Five steps to open a Roth IRA Roth IRA at a Glance Step 1 Take Your Financial Inventory by gathering your financial records Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Step 2 Determine Your Needs Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Set a Goal. Establish a definite time frame, then target the specific amounts you'll need to reach those goals. Step 3 Comparison Calculator Step 4 and 5

  12. Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator Use Asset Allocation to Achieve Your Goals and Manage Risk Step 4 Open a Roth IRA account by contacting an IRS approved financial institution or your financial advisor Step 5

  13. Roth IRA at a Glance Eligibility and Contribution limits Eligibility Calculator Advantages of Roth IRA Disadvantages of Roth IRA How Roth IRA works How to open a Roth IRA account Comparison Calculator Comparison Calculator This calculator will help you compare your investment returns from Roth IRA with any other investment scheme you are currently using

  14. Glossary Expenditure of money or effort for future benefits Investment Or AGI, represents your total income reduced by certain deductions known as "adjustments Adjusted Gross Income Asset Allocation Asset Allocation can be summed up in one word: diversification. By diversifying your savings across different types of investments, from conservative bond funds to more aggressive growth stock funds, you can help reduce the risk of volatility associated with any one particular investment. It's like the old adage, "Don't put all your eggs in one basket."

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