Funding a Roth IRA

Over the years, a lot of my clients, whether they’re in residency or out of training have asked if I wanted to put money away on a long-term basis, where do you feel like I would be best served with those monies?

My thought process is if we think that tax brackets could potentially be higher in the future, would it be sensible to increase the amount of money in our tax-free bucket? If the answer is both of those questions is yes, funding a Roth IRA is, simply put, the best strategy for you in that capacity.

So you might ask yourself, why is it so important to fund a Roth IRA when in training when I have limited resources available to me? Or when I’m in practice where I’ve been told that my income precludes me from being able to make a contribution?

Well, let’s talk first about training. The primary reason we advise you to fund a Roth IRA, is that while in training you’re more likely to be qualified for on. You might not be able to utilize a Roth once you complete training because you may make too much money. Once your income level exceeds a particular point, by definition, the IRS says you can no longer make direct contributions to a Roth IRA.

Secondly, the benefits of compound interest in a tax-free account are significant when considering long-term growth and future tax brackets. With a Roth IRA, the contributions happen after tax so you receive no tax benefit. Today, the values grow on a tax-deferred basis and you have access to them on a tax-free basis.

This is a sizeable consideration when considering your net worth. For some of my clients that are in practice, it’s critical to be aware that you could still fund a Roth IRA. We have another video post here describing exactly this subject.

If you would like to learn more about this subject or receive a free quote then please contact us and we’ll be happy to help.

By Anthony C. Williams, CWS, ChFC, MRFC, CLU | Investment Advisor Representative | President & Founding Partner of Mosaic Financial Associates & Orthopaedist Advisory Group | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.