The 3 Biggest Myths About Roth IRAs

I'm Tyler, a former financial advisor and portfolio manager, and I create content for free to help you understand your financial options. Here are the three biggest myths about the Roth IRA.

1. Everyone Should Open and Contribute

The first myth is that you should open and contribute to a Roth IRA no matter what. If anyone ever tells you there’s a one-size-fits-all solution in finance, they’re selling you something. If you're currently in a low tax bracket and believe you'll be in a higher one when you withdraw the money, a Roth can be a great idea. But if your tax situation is flipped, that would be a silly idea.

2. Income Limits on Contributions

The second myth is that there’s an income limit for contributing to a Roth IRA. While it’s true there are income limits for contributing directly to a Roth IRA, there are no income limits for converting to one. You can contribute to a traditional IRA and then convert it to a Roth IRA. This means that taxes are now your problem and it’s all solved.

3. Accessing Your Money

The third myth is that you cannot touch the money until you’re 59 and a half. Any dollar you contribute to a Roth IRA can be taken back at any time, penalty and tax-free. It’s only the gains that you can’t touch until age 59 and a half. And good news—it’s a retirement account, so you shouldn’t want to touch it anyway.

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