Roth IRAs are similar to traditional IRAs, and the biggest difference between the two is the way they are taxed. In addition, participating in a qualified retirement plan has no influence on your eligibility to make contributions to the Roth IRA or a Gold IRA. People with traditional IRAs should start receiving the required minimum distributions when they turn 72, but there is no such requirement for Roth IRAs or Gold IRAs. For people who work for an employer, the compensation that is eligible to fund a Roth IRA or Gold IRA includes salaries, salaries, commissions, bonuses, and other amounts paid to the person for the services they provide. A Roth IRA is an IRA that, except as explained below, is subject to the rules that apply to a traditional IRA.
This and other key differences make Roth IRAs a better option than traditional IRAs for some retirement savers; however, Roth IRAs are not available to everyone. So, if you have the money and meet income limits, you can contribute to a 401 (k) plan at work and then contribute to your own Roth IRA. It's also worth paying attention to the definition of earned income that the IRS uses to determine eligibility for Roth IRAs. If your earned income exceeds the limit set by the IRS, you won't be able to contribute to a Roth IRA for that tax year.
The good thing about Roth 401 (k) is that there aren't the same income restrictions as Roth IRAs. Using this definition of compensation, if your income is above the Roth IRA limit or is zero for a tax year, you won't be able to contribute to a Roth IRA for that year. Open and contribute to a traditional IRA, and then convert it to a Roth IRA after holding the funds for one year. After the end of the calendar year, your tax accountant can tell you if you are eligible to make a contribution to the Roth IRA for that year and you have until April 15 to make a contribution from the previous year.
The money in a Roth 401 (k) grows tax-free, and when you withdraw it in retirement, you won't pay taxes on it, since it was funded with after-tax dollars, just like in a Roth IRA. Roth IRAs are open to anyone earning income in a given tax year, as long as they don't earn too much or too little.
