History of the Roth IRA
In 1971, an army veteran from Delaware named William Victor Roth began his near-30-year tenure in the United States Senate. He sought to build upon his brief stint in the House of Representatives by tenaciously pursuing tax cuts for the American people. 26 years after his first election, Senator Roth fathered one of the finest achievements in tax reform. The government implemented a new retirement savings vehicle as part of the Tax Payer Relief Act of 1997 in accordance with the senator’s vision. Over 20 years later, the Roth IRA continues to provide investors with unparalleled retirement opportunities over the totality of their lives.
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Roth IRAs hold hundreds of billions of dollars in cash and assets today. That figure will assuredly climb as investors continue to adopt the unique advantages provided by Senator Roth’s signature brainchild. These accounts don’t allow tax-deductible contributions the way Traditional IRAs do. However, distributions from a Roth IRA may not be taxable if certain conditions are met. The plan holder must be 59 ½ years old and the Roth must be five years old. Roth contributions may be distributed tax free anytime since they bear no tax-deferred benefit in the first place. Furthermore, Roth IRA holders will never have to take required minimum distributions.
The Tax Payer Relief Act of 1997 also expanded the parameters for IRA-eligible precious metals. Per Section 304, retirement plans can own gold, silver, platinum, and palladium items that meet certain purity minimums. This allows individuals to supplement their non-retirement precious metals investments by adding their chosen items to their self-directed Roth IRAs.
Roth IRAs Today
In addition to precious metals, a Roth IRA can hold any alternative assets allowed by the IRS. If you’ve already established a successful Traditional IRA and would like to enjoy the perks of a Roth, you may execute a Roth conversion to apply a post-tax status to your existing portfolio. Conversions are taxable, but the benefits of the Roth will apply thereafter.
Currently, Roth conversions can occur without limit, so you may convert any number of Traditional IRAs if so desired. The same Roth distribution rules apply for converted holdings. You may not withdraw the converted balance tax free until five years after the conversion and only upon reaching age 59 ½. However, once that period passes, you may execute distributions as if your plan was a Roth IRA all along.
To open a Roth IRA, execute a Roth conversion, or inquire about any matters related to self-directed IRA investing, feel free to give us a call at 877-742-1270 or send us a message through the Client Portal.