Best IRA for Self Employed – Benefits of Roth IRA You Don’t Know
What is the best IRA for self-employed individuals?
The Roth IRA is one option. Oftentimes considered as the best IRA for self-employed, the Roth IRA has several benefits.
Not subject to Required Minimum Distribution (RMD) rules
Unlike other traditional retirement accounts, the Roth IRA is not subject to RMD rules. RMD rules require retirement account holders to take distributions from their accounts at a certain age.
The Roth IRA allows you to continue accumulating tax-free income throughout your life, without having to take RMDs.
No 10% early withdrawal penalties
If you withdraw contributions from your Roth IRA before age 59 ½, the withdrawal is not subject to the 10% early withdrawal penalty. Note that this withdrawal is still subject to the 5-year waiting period. But if you comply with the waiting period, you do not have to pay the early withdrawal penalty on the withdrawal of your converted or contributed amount from the account. This feature makes the Roth IRA the best IRA for self employed.
Distribution extension for surviving spouse
The Roth IRA can also be a useful investment for the surviving spouse, if the account holder passes away. That’s because the account beneficiary of the retirement plan can opt to continue contributions to the plan. Or, the beneficiary could combine the Roth IRA with his/her own retirement plan.
The surviving spouse can benefit from the Roth IRA, particularly with its tax-free features. In contrast, other traditional retirement accounts cannot be combined and merged with the surviving spouse’s IRA. In addition, the surviving spouse is not allowed to contribute to those types of accounts.
It’s important to be aware of the Roth IRA and its features. Sense Financial Services is one of the leading providers of this retirement account. We facilitate and establish both the Solo 401k and the Self-Directed IRA.