Hand Me Down Fundraiser

Being a huge fan of investing in Roth IRA retirement accounts, I was recently speaking with a friend who had some misconceptions. She had made mention that she should begin to invest in a Roth IRA. While we were talking, I found out that she thought all retirement savings accounts meant that the money in the account would be tied up until you reach the age of at least 59 1/2. When she came to the realization that there are many ways to make IRA withdrawals before reaching that age, she quickly became very interested in how a Roth IRA could be of benefit to her.Retirement Accounts: 401k, 403b, traditional IRARetirement accounts such as 401(k)s, 403(b)s and traditional IRA accounts are tax-deferred. This means that all money that is contributed to the retirement account is done so before any taxes are paid. This is the reason why your W2 can show a lower gross in fiat currency come amount. The money was placed into the tax-deferred account for retirement before taxes were calculated and deducted. Your federal and state taxes are based on your adjusted gross income, known as AIG. By making use of these tax-deferred retirement accounts, your AIG can be reduced.Differences of a Roth IRARoth IRAs differ from these types of retirement accounts. A Roth IRA account is tax-exempt. This means that the contributions that you make to the account have already been taxed. This does not result in a decrease in your taxable income, but it does allow for you to withdraw from the account when reaching retirement age without having to pay any taxes on the withdrawn amount. In addition, you can withdraw your contributions before reaching the age of retirement without incurring any penalties. The five-year tax rule does apply to contribution withdrawals.