Why a Roth IRA Is a No-Brainer for Retirement Savers

Looking for a surefire wealth builder? Open a Roth IRA. You fund this retirement account with after-tax dollars, so the pain is up front. The payoff? All withdrawals are tax-free if you’re at least 59½ and have held the account for at least five years. You can always withdraw your original contributions tax- and penalty-free.

With traditional IRAs and 401(k)s, you have to take required minimum distributions every year. Not so with a Roth -- you can withdraw money strategically. Or, you can just let it grow and leave it to your heirs. And because withdrawals from a Roth aren’t reported to the IRS as income, they won’t increase the taxes on your Social Security benefits. Roth withdrawals also won’t trigger the high-income surcharge on Medicare Part B or Part D.

You can contribute up to $5,500 to a Roth IRA in 2017 – or $6,500 if you’re 50 or older – as long as you meet income limits. Allowed contribution starts to shrink if modified adjusted gross income is more than $186,000 for married couples filing jointly, or $118,000 for singles. You can’t contribute at all once modified adjusted gross income reaches $196,000 for joint filers, or $133,000 for singles.

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Earn too much to qualify for a Roth IRA? Your employer may offer a Roth 401(k), which has no income limits and carries the same higher contribution caps as a regular 401(k). For 2017, the 401(k) contribution limit is $18,000, or $24,000 if you’re 50 or older.