The Informed Investor

5 Things to Know About Your Roth IRA

November 30, 2021

Roth IRAs are an excellent choice for retirement savings because they offer tax-free growth on investments, as well as tax-free withdrawals. Whether you already have a Roth IRA or you’re considering one, here’s what you need to know.

There Are Variable Contribution Limits

First, it’s important to know the contribution limits for each year, as they can change from one year to the next. In 2021, the contribution is $6,000 for those under the age of 50, and $7,000 for those who are 50 and older, assuming your modified adjusted gross income is below $140,000 for single filers or $208,000 for married couples who file jointly.

You Will Profit from Future Tax Benefits with a Roth IRA

One of the reasons Roth IRAs are recommended for those who are eligible is their significant tax benefits. Anyone who has earned income can open an IRA. That includes people who have a 401(k) through an employer. The only limitation is on the combined total that they can contribute in a single year to those retirement accounts while still getting the tax advantages. Anyone who is 59 1/2 or older and who has an account for at least five years can withdraw money from their Roth IRA without paying any federal taxes. This is because the taxes on your investment are paid upfront; even as your money compounds, no additional taxes are owed. You won’t pay any federal taxes on your distributions and earnings.

If you have reason to believe your tax rate will be higher in the future, a Roth IRA allows you to contribute to your retirement savings now, while your tax rate is lower. There is a significant benefit to future tax-free withdrawals from your Roth IRA.

Fewer Penalties for Early Withdrawal

Generally speaking, it is not prudent to withdraw from a Roth IRA or any other retirement savings account before you’ve reached the required age. That said, if there are extenuating circumstances that require a withdrawal, a Roth IRA allows you to do so without having to pay taxes or penalties. The caveat here is that you can only withdraw from your contributions without penalty—if you need to also withdraw your investment earnings, there is a 10% penalty in most cases.

Roth IRAs Offer More Flexibility

There is a lot of flexibility built into the Roth IRA program:

    • You can contribute to a Roth IRA and a 401(k), up to the annual allowed limits. The website can provide you with the limits set each year.
    • You can choose how you contribute to your Roth IRA, whether it’s a lump sum or you split your contributions throughout the course of the year.
    • You don’t have to make your annual contribution until the tax deadline for the previous calendar year.
    • Roth IRAs have no minimum distribution requirements
    • Children under the age of 18, with earned income, may open a custodial Roth IRA.

You Can Lose Money in a Roth IRA

It’s important to remember that a Roth IRA isn’t a savings account—it’s an investment account. Like any investment, it can lose money. This is why it’s important to work with a financial advisor you can trust. At ICC, we adhere to the fiduciary standard, which means we have no financial incentive to steer you towards investments that aren’t in your best interest. Investments are always a risk, but this risk is lessened when you work with a team that puts your financial needs first and discloses or has no conflicts of interest.
Learn More About Roth IRA Accounts
If you have $3 million or more in investable assets and would like to learn more about Roth IRA plans, our financial advisors are here to help. ICC provides clear and unbiased guidance for its clients, backed by a team of experienced fiduciary, financial experts. Contact us today at 702-871-8510 to learn how our team can help you.



The Investment Counsel Company of Nevada (“Company”) is an SEC registered investment adviser located in Las Vegas, Nevada. Company may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. Company’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of Company’s web site on the Internet should not be construed by any consumer and/or prospective client as Company’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by Company with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of Company’s current written disclosure Brochure discussing Company’s business operations, services, and fees is available from Company upon written request. Company does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Company web site or incorporated herein, and takes no responsibility, therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s).

Certain portions of Company’s web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, Company (and those of other investment and non-investment professionals) positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from Company, or from any other investment professional. Company is neither an attorney nor an accountant, and no portion of the website content should be interpreted as legal, accounting or tax advice.

Please Note: Limitations: Neither rankings and/or recognition by unaffiliated rating services, publications, media, or other organizations, nor the achievement of any professional designation, certification, degree, or license, membership in any professional organization, or any amount of prior experience or success, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Investment Counsel Company is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers (see below as to participation data/criteria, to the extent applicable). Unless expressly indicated to the contrary, Investment Counsel Company did not pay a fee to be included on any such ranking. No ranking or recognition should be construed as a current or past endorsement of Investment Counsel Company by any of its clients.

ANY QUESTIONS: ICC’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including the criteria used for any reflected ranking. Please review Important Disclosure Information set forth in the last section of this website.