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Tax-Free Forevermore: The Roth IRA

In this edition of our Motley Fool Conversations series, Fool personal finance expert Dayana Yochim and retirement planning analyst Dan Caplinger discuss the ins and outs of Roth IRAs. Roths don't give you the same up-front tax deductions that traditional IRAs do, but in return, you never have to pay taxes on your Roth IRA money -- even when you take it out of the Roth during retirement. 

Dan and Dayana go through the decision-making process in figuring out whether a Roth IRA makes sense for your financial situation. In addition, Dan makes some specific recommendations for stocks and other investments that work especially well in a Roth IRA, with a particular focus on stocks that are poised to provide maximum growth over the long run to take full advantage of the Roth's tax-free benefits.

Altria may well be a good candidate for a long-term Roth IRA holding, but it has some challenges it needs to overcome first. Learn more in our premium research report on the tobacco giant, in which our top analyst looks at the question of whether Altria is still a buy today. To find out whether everyone's love-to-hate dividend stock is a savvy investment choice or a hazard to your portfolio, simply click here now for access to the report.


Read/Post Comments (5) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 13, 2013, at 7:55 PM, JAO13 wrote:

    The video mentions Roth income limits. It’s possible to avoid the income limit by making a nondeductible contribution to an IRA and then doing a Roth conversion, though there can be tax consequences in certain instances if this strategy is used.

  • Report this Comment On February 13, 2013, at 11:45 PM, Gybnyhgrf wrote:

    What can/should I do if I contributed to a Roth throughout the year, only to realize that I have unexpectedly exceeded the income limit?

  • Report this Comment On February 14, 2013, at 2:53 PM, dcoxdcox wrote:

    I'd like to see some statistics on how often people are in a higher tax bracket in retirement vs. their tax bracket when making IRA contributions. For a younger person just starting out, there may be a greater chance this happens, but for someone such as myself in my mid-50's, I think it highly unlikely that I will be in a higher tax bracket after retiring. If I am in a higher tax bracket, it'll only be because I won the lottery!

  • Report this Comment On February 14, 2013, at 10:28 PM, TMFGalagan wrote:

    @Gybnyhgrf - Contact your Roth IRA provider and talk to them about recharacterizing your contribution. You'll be allowed to undo the contribution to avoid any problems with the income limits.

    best,

    dan (TMF Galagan)

  • Report this Comment On February 15, 2013, at 4:33 PM, scarbender wrote:

    I'd rather pay the tax on the seed, than the harvest.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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