About Roth Financial Planners
- Learn how financial planning works before seeking help with your Roth retirement accounts. The plans allow for both tax-free appreciation and withdrawal. The plan is restricted to individuals making less than $101,000 in adjusted gross income or married couples making less than $159,000. Roth retirement savings plans work well for people in relatively low tax brackets. Such individuals derive a greater benefit from the tax-sheltered appreciation of Roth accounts.
- When filing federal and state taxes, you cannot deduct any contributions you make to a Roth IRA or 401(k) plan. Nor can the amounts your employer contribute be deducted from your gross income. After you contribute the money into the plan, however, it's sheltered from all taxation. Any interest accrued while the investment is in the Roth account is also not subject to taxation. Individuals under 50 can contribute $4,000 per year and those over 50 can contribute up to $5,000.
- Planners often have group discounts that reduce fees paid to fund managers. They vet the hedge, mutual and bond funds that they suggest to their clients for past success. They interpret fund prospectus documents for their clients and provide summaries with relevant information to make the comparison process more efficient. Roth plans benefit more from higher-return funds relative to other retirement plans.
- Fee-based planners advise their clients for an annual or per-session fee. Percentage-based planners derive their income from a percentage of the investment transactions made by their clients. In most cases, fee-based planners offer more competitive rates for clients who are only looking for a short-term planning relationship. Those who charge based on a percentage of funds invested generally offer lower fees per session.
- As you approach retirement, financial planners will alter your investment strategy to match your risk tolerance. Planners will typically advise these clients to shift more of their portfolios from stocks to bonds to insulate them from market gyrations. Planners also determine a good withdrawal schedule for clients about to enter retirement. In some cases, planners advise their clients to roll over their Roth account into a life-insurance policy or annuity.
- Roth retirement accounts have a much higher appreciation potential than traditional IRAs, as the latter are subject to income taxes upon withdrawal. The majority of retirees are in a higher tax bracket when they end their careers than when they started them. This is the primary benefit of a Roth retirement account.
