About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and is currently pursuing his Certified Financial Planner credentials. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 523 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 14 comments… read them below or add one }

Zack Jones

Please explain #7 a little more. How are you able to make a contribution to your Roth for tax year 2011 after you’ve already filed you 2011 taxes? I’m assuming you don’t have to report your contributions on your income taxes?
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Hank

You’re correct. You do not have to report your Roth IRA contributions on your taxes unless you are a low income earner and are collecting the Savers Credit, formally known as the Retirement Savings Contributions Credit (tax credit). http://www.irs.gov/newsroom/article/0,,id=107686,00.html

If you can claim the Savers Credit and have already filed your 2011 taxes, you can always file an amendment to your taxes. But, Roth IRAs allow you to continue to contribute your $5,000 or $6,000 in your case for last year all the up to tax deadline day (April 17th because of the weekend this year.)
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Jai Catalano

I also look at it like money I can’t touch. I mean I know I can touch it but it helps to know that it is growing and I am not touching it.
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Hank

It’s kind of like a built in savings account that is harder to touch than simply going to the teller counter with a withdrawal slip.
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Elizabeth @ Simple Finance

I am a huge advocate of the Roth. My husband actually has a Roth 401(k) – I didn’t think they actually existed, but his employer puts a certain percentage of my husband’s salary into a separate IRA. It’s immediate diversification!
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Newlyweds on a Budget

I have a Roth IRA, now I just need to actually contribute to it!
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MyMoneyDesign

I’m a big promoter of Roth IRA’s. This is a great and easy presentation of the benefits. By their own rite, each of them is beneficial. I personally got into a Roth on the principle alone that if I ever needed the money back I could get it (after 5 years) (but I probably won’t ever touch it).

You did leave out one of my favorite reasons to pick the Roth over the Traditional: You have a higher effective savings rate! I have a post of my own where I work out the math:

http://www.mymoneydesign.com/personal-finance-2/retirement/traditional-vs-roth-ira-%e2%80%93-part-3-why-i-prefer-a-roth-ira/
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Brent Pittman

Ah Yes, the ROTH. If only I had started earlier! I wasn’t aware of #7 either, I thought you had to contribute before you file taxes.
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Hank

You have up to April of the next year to contribute for last year.
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JoeTaxpayer

Hank, #10 – So long as the Roth IRA has a beneficiary listed, the beneficiary can take RMDs over their lifetime. The 5 year distribution is if there is No beneficiary listed and the IRA passes through a will.

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Hank

Thanks for the clarification, Joe. I appreciate the info. Good to know.
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Tom@BestCarCoverage

Nice list on reasons to own a Roth IRA. I actually converted some of my traditional IRA to a Roth with the intent of buying real estate. It is not an easy process but with rental income and capital gains tax free I hope to diversify retirement funds into real estate.
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