Roth IRAs and Retirement: What You Need to Know (Ep. 73)
Roth IRAs can feel confusing—but when you understand how they work, they can become one of the most powerful tools in your retirement plan.
In this episode, you’ll discover how Roth IRAs may give you more control over your taxes in retirement, create flexibility for future withdrawals, and help protect your income for the long run.
We’ll cover the basics—what Roth IRAs are (and aren’t), how the rules for contributions, conversions, and withdrawals really work, and why Congress has been pushing Roth accounts more in recent years. You’ll also hear how Roth IRAs may help you avoid hidden tax traps like higher Medicare premiums or unexpected Social Security taxes.
Key takeaways:
- Why Roth IRAs are not investments themselves, but tax-advantaged account types that act like umbrellas shielding money from future taxes
- How Congress is encouraging Roth contributions through Secure Act 2.0, giving retirees long-term tax-free opportunities
- The importance of tax diversification, comparing it to and even elevating it above portfolio diversification
- Four ways to fund Roth accounts: contributions, conversions, rollovers, and backdoor strategies
- The five-year rule, distribution order, and how Roth IRAs can help control tax brackets, Medicare premiums, and Social Security taxation
- And more!
Resources:
- Get Your FREE Simply Retirement Roadmap
- Check out our Free Roth IRA Toolkit!
- #54 – How Social Security Gets Taxed: What You Need to Know
- #57 – 7 Ways to Access Retirement Funds Early Without a Penalty
- #65 – How the New Tax Law Could Impact Your Retirement
Connect with Eric Blake:
- www.TheSimplyRetirementPodcast.com
- Join the Simply Retirement Newsletter
- Ask a Question or Suggest a Topic for the Podcast
- Blake Wealth Management
- YouTube
Roth IRA earnings grow tax-free, and qualified withdrawals are also tax-free, provided certain conditions are met (e.g., the account has been open for at least 5 years and you are age 59½ or older, or meet another qualifying condition). Eligibility to contribute to a Roth IRA phases out at higher income levels. For 2025, contributions begin to phase out at a modified adjusted gross income (MAGI) of approximately $150,000 for single filers and $236,000 for married couples filing jointly. Non-qualified withdrawals of earnings may be subject to income taxes and a 10% early withdrawal penalty. Converting a traditional IRA or other tax-deferred account to a Roth IRA is a taxable event and may increase your current-year tax liability. Roth conversions cannot be undone.
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