Robert Brokamp

You took a lot of money out of the traditional account and poof, you now are going to have to pay higher premiums for your Medicare.

But if you have money in a Roth, you have the optionality to say, you know what, I have this big ticket expense.

I'm going to take it out of the Roth and therefore not affect my Medicare premiums and maybe Social Security taxation if you're in a lower tax bracket.

All right, let's move on to reason number four.

This has maybe a double-edged benefit to it, but easier access to the money before age 59.5.

This is more for Roth IRAs than 401 s. I'll qualify this by saying, the tax-free withdrawals from a Roth, there are some rules.

The account has to have been open for five years and you have to be age 59.5.

Except with the Roth, you might be able to access some of that money earlier.

That's right.

Yeah, and just for clarification, you did point out that that is about Roth IRAs.

Roth 401ks are a little more complicated.

The withdrawals that come out are a rateable proportion of contributions and earnings.

But even so, those contributions will come out tax and penalty free.

And I think this is important to think about.

Especially for people, if you're sort of on the edge, you're like, you know, I'd like to contribute to my Roth IRA, but I might need that money sooner for an emergency fund or I'm sending kids to college or something like that.

I just think it makes you feel better knowing like, okay, I'm going to put this money in this Roth IRA.

I hope to leave it alone until I am 59 and a half or until I retire.

But...

I know I can get to it if I have to.

And I think that just makes people a little bit more comfortable contributing to the account.