5 Advantages of Roth IRAs- #3-No RMDs

Wealth Advisor

One major advantage of a Roth IRA is that it’s not subject to required minimum distributions (RMDs). Unlike traditional IRAs, where you’re mandated to withdraw money starting at age 72, a Roth IRA doesn’t force you to take distributions regardless of market conditions. This flexibility can help you avoid selling or withdrawing when the market is down, preserving your retirement savings.

Video Transcript

The third advantage to a Roth IRA is that they are not subject to RMDs or required minimum distributions. So if you had money inside of a traditional IRA at the age of 72, the government says you have to start taking distributions from that account whether you want to or not.

If the market is up or down, that has no bearing on whether or not you need to take a distribution, you still have to take one. So money inside of a Roth, big advantage is that you are not subject to those required minimum distributions. Let’s say for example you had a $1 million traditional IRA and at the age of 72 the government said you had to start taking money out of it and let’s say the market was down 20%.

That could place serious stress on your portfolio forcing a distribution when the market is down, when that account value is down. So if that money was sitting inside of a Roth IRA, you would not be subject to take a distribution, you could actually ride that out if you didn’t need to take one.

The last thing we want to do is sell or take a distribution at any time when the market is down.

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5 Advantages of Roth IRAs

5 Advantages of Roth IRAs- #1-Tax-Free Growth and Distribution
5 Advantages of Roth IRAs- #2-Access Contributions If You Need To
5 Advantages of Roth IRAs- #4-Pass to Heirs Tax-free
5 Advantages of Roth IRAs- #5-Asset Location

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