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Investment Strategies

Sunday, October 2, 2005provided by

A look at some strategies for the Roth IRA.

There are various ways to use a Roth IRA. Here are some ideas, along with discussion about when they work well and when to avoid them.

Topic Summary

Roth IRA and College Savings
You should be able to take penalty-free distributions from your Roth IRA to pay college expenses. But in most cases you can't take tax-free distributions from the earnings in your account, and that means the Roth IRA isn't always the best choice for college savings.

Roth IRA and Saving for a Home
The strategies here are similar to the strategies for college savings, but with an added twist: if you fit the right fact pattern, you can take a tax-free distribution from the earnings in your account for this purpose even if you're under age 59¹/₂.

Post-Retirement Roth Conversion
Does it make sense to roll a regular IRA to a Roth IRA later in life? In many cases the answer is yes, but careful planning is needed to avoid shifting income into a higher tax bracket.

IRAs for Minors
A minor can set up a Roth IRA — but only if the child has taxable compensation income.

Other Topics

Here are the other topics in our Guide to the Roth IRA:

• Roth IRA Essentials
• Regular Contributions
• Conversions and Rollovers
• Distributions from Roth IRAs
• Undoing Contributions and Conversions
• Decision Factors

cobrand_copyright, Kaye A. Thomas. All rights reserved.

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