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In addition, any funds you contribute to a Roth IRA have to be kept there until you attain the age of 59.5 years and the minimum period that funds have to stay in the account is 5 years. The other aspect of a Roth IRA is that all contributions are done after-tax so you cannot avail any tax deductions. However, all earnings in fund grow tax-free and you can withdraw the earnings from the plan without having to pay any taxes. For instance, you have contributed 100,000 in your Roth IRA and you have earned $100,000 on your contribution. You can withdraw the earned $100,000 without paying any taxes. In addition, there is no minimum distribution for a Roth IRA and many people prefer to let the earnings grow tax-free for a few years even after they retire.
The best part about a Roth IRA is that you can withdraw money anytime you want. The only thing you have to take care of is keeping the contributions and earnings separate.
In case you do not have a Roth IRA or any other retirement plan, you will first have to open an ordinary IRA plan, contribute to that plan for two years and it is only after that that you can open a Roth IRA.
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