BASIC STEPS:
- After you have paid taxes on your income, you get an in-hand post-tax income/profit.
- From this amount, you can contribute a maximum of $6k/yr = $0.5k/month into your Roth IRA account.
- Good Roth IRA account providers allow investments in crypto/stocks/bonds/ETFs, etc.
- Choose the investment of your choice and start making monthly or yearly contributions.
WITHDRAWL RULE for INITIAL INVESTMENT (PRINCIPAL):
You can withdraw your principal/initial contribution penalty free & tax free ANYTIME
WITHDRAWL RULES for Roth IRA PROFITS:
- pay both penalty+tax: age < 59½ & its NOT been 5years since your contribution
- penalty+tax free: age 59½+ & its been 5years since your contribution
- pay taxes only: age 59½+ & its NOT been 5years since your contribution
EXCEPTION WITHDRAWL RULES for Roth IRA PROFITS:
- penalty+tax free for exceptions: age < 59½+ & its been 5years since your contribution
- pay taxes only for exceptions: age < 59½+ & its NOT been 5years since your contribution
EXCEPTION WITHDRAWLS ALLOWED:
- First-time home purchase (up to a $10,000 lifetime total maximum withdrawl allowed)
- Qualified education expenses (college, etc.)
- Birth or adoption expenses
- You become disabled or pass away
- Medical expenses not reimbursed by your Health Insurance
- If unemployed, then health insurance costs
PROTIP:
- How to Get all your Traditional/Roth IRA money for 60days once a year:
- Request Traditional/Roth IRA Transfer (nontaxable rollover)
- Request check be made payable to you,
- Now you have up to 60 days to deposit that check into another IRA
- This process has no taxes or penalties and is useful when you need liquid cash quickly.
Disclaimers:
- All info listed above is for informational and educational purposes only.
- Info may change from year to year. Info listed here might be out-of-date.
- This list is not comprehensive. It is provided to you with the understanding that we are not engaged in rendering tax advice.
- The information provided is not intended to be used to avoid federal tax penalties.
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